With a new administration taking over, citizens expect plenty of changes in federal rules and regulations. Of course, each presidential transition means new policies or modifications to the existing ones. HR and employee benefits landscape is no exception to it and with President-elect Joe Biden taking office, after Donald Trump, we may see him overturning or revising many regulations. Changing predecessor’s rules is a common trend between administrations and soon we might see Biden undoing the work of the former president.
As policies will be revised, employers and organizations have to be prepared to restore stability in the year ahead to avoid any penalties or other hassle. Hence, employers may have to redraft internal policies, change organizational priorities, recategorize workers, rewrite employee handbooks, along with managing various HR responsibilities. Especially for small businesses that often do not have a separate HR department, they have to keep pace with the changes to stay on top of their game. The more adaptive and prepared they will be, the easier it will be for them to attain success in this unpredictable year, 2021.
Companies relying on benefits administration software to offer various benefits plans and schemes to their employees must be aware of the impact that the Biden administration may have on employment and related policies. During his campaign, he issued various proposals addressing retirement, healthcare, payroll, income taxes, medical & sick leave, minimum wage system, and more. Yes, some of the policies may not come to fruition but several areas may witness a significant impact. Thinking about these issues and planning in advance may prevent stumbling blocks in the future and eliminate last-minute changes when the time comes.
Want to get ahead of the curve? Then here is a blog that discusses potential changes and revisions that employers and employees can expect during Biden presidency:
Biden has made several proposals regarding retirement plans and schemes but most of them will require legislative action. Of course, another critical factor is the willingness of Congress leaders to work together toward these policies and approve the legislation. Retirement savings and plans could provide possible bipartisan discussion and compromise. During the election campaign earlier, Biden issued a proposal to equalize the tax benefits of the defined contribution plans, provide automatic 401(k) programs to allow workers access to retirement savings without an employer-sponsored plan, and give tax incentives that encourage plan sponsorship among small businesses.
Moreover, he also announced catch-up contributions for employees who leave their jobs temporarily to take care of their family members and allowed domestic violence and abuse survivors to access their retirement savings. Considering the developments, it is better if your HCM software implements the changes as it will help you avoid risks or obstacles in the coming months.
Even since the ACA (Affordable Care Act) has been introduced, healthcare has been a trending topic for many. We all are aware that Trump tried but was unsuccessful to dismantle it but Biden supports the program and his official website and months of campaign indicate the same. He plans to maintain the ACA framework and even expand the public health option that is quite similar to Medicare. According to his website “Biden opposes every effort to get rid of this historic law – including efforts by Republicans, and efforts by Democrats.” He won’t be working on it from scratch or getting rid of private insurance but plans to build on the ACA by offering more choices to Americans that will reduce healthcare costs and make the entire system less complicated to navigate.
Of course, there are many factors that will impact any efforts toward this plan but still, one can expect further expansion and must be prepared for it. One most important point that small businesses must note is that Biden aims to keep employer mandate and all the enterprises that employ 50 or more full-time employees must provide affordable healthcare insurance to workers. Also, the public option would be available to all even if the employers offer qualified-health plans. Yes, specifications are still not clear but we just have to wait for confirmation.
Leaves have always been an integral part of Benefits enrollment and administration and employees often look forward to additional advantages whenever policies are revised or administration is changed. With Biden taking over as the president of the USA, he supported the Family And Medical Insurance Leave (FAMILY) Act along with the 12 weeks of paid family and medical leave. There is no denying that paid leave has always been a priority for Biden throughout his political career and he is pushing the 12 weeks plan forward.
Under FAMILY Act, employees and workers will get up to 12 weeks of leaves with partial income that would be funded through a payroll tax. It also expands the qualified reasons for leaves and opens eligibility to more workers than before, covering all employees irrespective of the size of the company. Although Biden completely supports many components of this policy, he hasn’t endorsed it fully. Workers can avail of these leaves in case of:
- Their own health issues, including pregnancy and recovery period from childbirth.
- Military-related caregiving requirements and leaves.
- Serious health conditions of dependents, which include spouses, children, parents, etc.
Over the years, the minimum wage has varied significantly and by the end of 2020, many states have gradually increased it but not all the states of the USA. Now, Biden intends to raise the federal minimum wage to $15 per hour and also eliminate the tipped wage. The current minimum wage is $7.25 and it was increased only by a couple of dollars for every two decades. If the amount is raised to $15, then this would be one of the most significant raises in the minimum wage historically.
The website of Biden also explains that he supports indexing the minimum wage so that it will automatically adjust the amount to keep pace with the costs of living, typically inflation. According to the website, “He plans to base the indexing off of the median hourly wage “so that low-wage workers’ wages keep up with those of middle-income workers.”
Another change that we would see is the elimination of the tipped wage which is $2.13 per hour. At present, tipped workers earn a lower minimum wage which we call a tip credit, and make up the difference with tips or are paid the remaining amount by employers in case they don’t make enough. The new plan will eliminate the tip credit and employers will have to start paying more money to employees which will also increase labor costs. We cannot state all the specifics and cannot predict how it would shape up but this rule will surely bring some great changes.
Medicare & Public Insurance
As we mentioned earlier that Biden plans to expand the Affordable Care Act (ACA) and revise it to offer more benefits. However, the part of this expansion is also to add a public insurance option to the mix which is almost like Medicare. According to what he proposed, the eligibility age for the plan will be lowered to 60 from 65. As most workers try to delay their retirement so that they can be eligible for Medicare coverage, the plan will make them retire earlier. Also, this public option will give everyone whether they have employment-based insurance or private insurance, or no insurance, an affordable health insurance option.
The idea behind the public option is to negotiate lower prices with hospitals and healthcare providers. It will also ensure better coordination among all doctors to improve the quality of their care and cover the cost of primary care without any co-payments. This will bring relief to small businesses that are struggling to afford coverage for their employees.
Biden is known to be pro-labor and a great supporter of the Protecting the Right to Organize (PRO) Act. This is quite evident by his campaign over the months and people are expecting the return of Obama-era labor rules. The bill would make it difficult to classify employees as independent contractors. Also, Biden is pushing the act further by baking in protections for workers’ ability to organize into unions and introduce penalties which also include criminal ones for executives who interfere with the employees’ efforts to organize.
This initiative would undoubtedly affect workers especially in the current gig economy and this may lead to corporate restructuring for businesses, such as GrubHub, Uber, and more.
All the above-mentioned points are proposals yet and it is yet difficult to predict how many of these policies and plans will be materialized and come to fruition. Also, it is too early to say to what extent these changes will impact HR teams, employment, and employee benefits. However, we would recommend being prepared before any change arrives and do whatever is needed to keep the workflow smooth and hassle-free.
Examine your employee benefits administration software platform according to the potential decisions rather than procrastinating it to the eleventh hour. Accomplish is a trusted HR software that keeps a close watch on all the updates and changes, keeping employers informed and maintaining compliance. Connect with our team now for further guidance and details.