House GOP Advances 401(k) ESG Curbs, Expansion of Health Plans

House Republicans advanced legislation that would boost non-traditional employer health benefit plans and make it harder for workplace 401(k) plans to fund environmentally friendly causes.

The House Committee on Education & the Workforce voted along party lines Wednesday to approve a pair of bills that would expand association health plans for small employers and limit state regulation of stop-loss insurance.

Another bill discouraging 401(k)s from selecting environmental, social, and corporate governance funds for workers also cleared the committee on a 21-15 party-line vote.

The bills would codify Republican attempts to sidestep Affordable Care Act protections for employer-sponsored plans and revamp the first Trump administration’s efforts to ax “woke” investments from pensions and 401(k)s.

The legislation can advance for a vote by the full Republican-controlled House.

Association Plans

Association health plans are made up of small businesses that coalesce under a single plan, cutting costs while avoiding essential health benefit requirements under the ACA.

The Biden administration last year rescinded the remaining components of a Trump-era US Labor Department rule greenlighting the association plans after a federal district court struck down key elements of the Trump rule defining an “employer” under the Employee Retirement Income Security Act.

The legislation (H.R. 2528) introduced by Committee Chairman Tim Walberg (R-Mich.) earlier this year would reestablish the Trump standard, paving the way for hundreds of thousands of US workers to receive health care sponsored by their employers, avoiding ACA insurance marketplaces.

Stop-Loss Insurance

Many large and mid-sized employers flocked to self-funded health insurance schemes to avoid the ACA’s minimum benefits package, medical loss ratio rules, and other fees, premium reviews, and marketplace reforms.

Stop-loss insurance, which protects self-funded plans from catastrophic medical claims, makes self-funded insurance a viable option for employers—particularly small businesses that may otherwise lack the capital to pay claims out-of-pocket.

The Obama administration signaled an interest in expanding federal regulations to treat stop-loss insurance as traditional insurance under ERISA. The Self-Insurance Protection Act (H.R. 2571) introduced by Rep. Robert Onder (R-Mo.) in May would preempt state regulation of stop-loss insurance under the ACA and prevent federal regulation of them under ERISA.

Anti-ESG Rules

Regulations over financial factors retirement plans must consider when choosing investments on behalf of workers have volleyed back and forth between the first Trump and Biden administrations.

The DOL said in May that it would replace a Biden-era rule that permit ESG considerations for tied alternatives. The Biden-era rule replaced a first-term Trump rule that put strict reporting requirements on sponsors who steered participant money into “woke” funds.

Legislation Rep. Rick Allen (R-Ga.) introduced (H.R. 2988) in May would codify the first Trump-era rule, which requires plan decision-makers to put financial factors above all else and reinstates the reporting requirements that were axed by Biden.