As we prepare for another change in Administration in the White House, it is crucial for employers and plan sponsors to stay informed and prepared.  While much of what lies ahead is speculative, understanding these possible changes can help employers navigate the uncharted waters of employee benefits.  Following is an overview of potential changes we may see under a second Trump Administration and their implications.

Health Savings Accounts (HSAs) Expansion: A New Horizon?

The Trump Administration has hinted at expanding Health Savings Accounts (HSAs).  This could mean more flexibility and tax savings for employers and employees.  However, the specifics remain uncertain.  Employers might consider how these expanded options might impact their current benefit plans and prepare for potential regulatory changes.

Affordable Care Act (ACA) Revisions: What Could Change?

The complete repeal and replacement of the ACA is not likely.  However, the Trump Administration has indicated it is exploring alternatives to enhance our healthcare system.  Changes to employer mandate requirements, essential health benefits, and wellness programs are all on the table.  Staying compliant with new reporting requirements to the IRS and DOL will be crucial.

Health Care Policy: Transparency and Reform

The Lower Costs, More Transparency (LCMT) Act includes site-neutral payment reform and promotes transparency in hospital billing.  Various acts aimed at pharmacy benefit manager transparency and accountability are also in focus in an effort to bring down the cost of prescription drugs.  On the wish list for employers is a safe harbor for Mental Health Parity compliance.  Employers may want to be on the lookout for important developments like these.

Expansion of Healthcare Alternatives in 2025: What to Expect?

President Trump demonstrated a willingness during his first term to open new avenues to healthcare coverage, including coverage under reinvented association health plans and individual coverage health reimbursement accounts (ICHRA).  It is possible these avenues will be revisited and expanded.  Employers should also be aware of potential changes to regulations on fixed indemnity and short-term insurance, as well as the extension of flexibility for telehealth services.

Telehealth and Remote Work Benefits: Here to Stay?

The COVID-19 pandemic has accelerated the adoption of telehealth services and remote work arrangements.  Employers might consider expanding telehealth coverage and adapting benefit plans to support remote work.  Compliance with state and federal regulations about telehealth and remote work benefits will be important.

Dependent Care Benefits: Higher Limits?

Dependent care costs have grown exponentially compared to the available dependent care credits or pre-tax benefits available under a dependent care flexible spending account plan.  The Trump Administration has expressed an intention of supporting working parents during President-Elect Trump’s second term.  That support may come in the form of phased-in higher limits on dependent care benefits.

Supporting Families: Enhanced Adoption Assistance Benefits?

With the overturning of the Roe v. Wade decision, family planning became a central issue in the 2024 elections.  While the Biden Administration pushed policies focused on access to reproductive care services, including birth control, the Trump Administration is likely to advance policies that focus on family building.  For example, it is possible the Trump Administration advances tax code changes to make adoptions and fertility treatments more affordable and rescinds recent Biden Administration initiatives that determined even male condoms can constitute “medical care” under Code Section 213.

Retirement Plan Reforms: What’s on the Horizon?

Trump has signaled his intention not to eliminate Social Security benefits.  Yet, there is a general recognition that fundamental changes are required to provide ample funding.  It is possible the Trump Administration explores increases to Social Security taxation rates or opens the door to enhanced employer-sponsored retirement plan savings opportunities to supplement Social Security, or both.  Updates on SECURE 2.0 and potential future legislation like SECURE 3.0 are important for employers to monitor.  Additionally, given the change in administrations, we will almost certainly see the pendulum swing back in the other direction with respect to how ESG considerations may be taken into account with respect to retirement plan investing.

Immigration Policies and Retirement Benefits: An Indirect Impact?

Proposed immigration policies could indirectly affect employee benefits, especially for employers that lean heavily on immigrant workers.  When former employees exit the United States, difficulties can arise with respect to the distribution of retirement savings.  Employers may wish to proactively communicate with their retirement plan recordkeepers to determine if actions can be taken today to facilitate distributions to non-U.S. residents.

Extension of the 2017 Tax Cuts and Jobs Act Changes

A number of employee-benefits related tax provisions that were included as part of the 2017 Tax Cuts and Jobs Act (TCJA) are set to expire at the end of 2025.  A promised extension of the tax-cut provisions of the TCJA will likely result in the extension of these employee-benefits related items.  In such event, most moving expenses and bicycle commuting expenses will continue to be fully taxable, and employees will continue to be unable to itemize deductions for certain miscellaneous expenses, such as unreimbursed employee expenses.  See our earlier post on the TJCA – 2018 Tax Reform Series: Tax Law Changes to Employee Fringe Benefits | Benefits Law Advisor.  Employers will need to stay informed about these ever-changing rules to ensure they correctly report compensation and withhold applicable taxes in accordance with legal requirements.

The Takeaway By staying informed and proactive, employers and plan sponsors can navigate the evolving landscape and ensure compliance while maintaining competitive and attractive benefit programs.  The Jackson Lewis Employee Benefits Practice Group members can assist if you have questions or need assistance.  Please contact a Jackson Lewis employee benefits team member or the Jackson Lewis attorney with whom you regularly work.