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Preliminary implications of the 2022 midterm elections on employee benefits, compensation

By Ann Marie Breheny , William “Bill” Kalten , Benjamin Lupin and Steve Seelig | November 21, 2022

A preliminary look at the election results and potential employee benefit and compensation-related implications for U.S. employers.
Benefits Administration and Outsourcing Solutions|Executive Compensation|Health and Benefits|Retirement
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The results of the 2022 midterm elections will shape the legislative landscape for employee benefit and compensation policy over the next two years. Below is an outline of the current status of the election results, other changes that are expected for the 118th Congress (2023 – 2024), and preliminary observations about potential benefit and compensation-related implications.

Vote counts continue, but control of Congress is now clear

As of this writing, some races are still undetermined, but control of Congress is clear. Senate Democrats will retain the majority with at least 50 seats (Vice President Kamala Harris provides the tie-breaking vote, giving Democrats the majority). Republicans will hold the House majority for the 2023 – 2024 legislative term.

A Republican majority in the House will have significant implications for the 118th Congress.

General legislative outlook

In a divided Congress, where each chamber is controlled by a different party, differing policy priorities likely will make it more difficult to move legislation to final enactment. Each chamber could block action on legislation approved by the other chamber in most circumstances. In addition, President Biden could veto much of the legislation he opposes, especially targeted or stand-alone legislation.

The lack of a 60-vote Senate majority will continue to be an obstacle in the Senate. For example, Democrats currently hold majorities in both the House and Senate, but many bills approved by the House have stalled because they cannot get the 60 votes need to move through the Senate under regular procedures.

During the upcoming session, legislation will have several possible pathways to enactment:

  1. Legislation with significant bipartisan support could gain momentum and move through Congress.
  2. Lawmakers in both chambers — and both parties — could seek to attach unrelated provisions to must-pass bills.
  3. Budget reconciliation will not be a viable legislative tool in a divided Congress. Budget reconciliation allows certain legislation to be enacted with a 51-vote majority in the Senate, using streamlined legislative procedures. During the current Congress, budget reconciliation was used for the American Rescue Plan Act in 2021 and the Inflation Reduction Act in 2022.

If policy changes face significant difficulty in a divided or narrowly controlled Congress, pressure will likely be placed on the Biden administration to make changes through Executive Orders, regulations and other administrative procedures.

With Republicans holding the House majority, we can expect active oversight of administrative and regulatory activities, including benefit-related regulations and guidance. Policies that could be subject to oversight and review during the 118th Congress include the fiduciary rule; environmental, social and governance (ESG) factors; the ACA family glitch; and cryptocurrency in retirement plans.1 Implementation of the Inflation Reduction Act could also be subject to significant oversight.2

Key departures, other changes

The retirement of some lawmakers, changes in House and Senate committees, and other factors also affect the agenda and outlook for benefits and compensation. Several lawmakers who have been active in retirement policy are retiring after the 2022 legislative term, most notably:

  • Senator Rob Portman (R-OH). Senator Portman has worked with Senator Ben Cardin (D-MD) to co-sponsor important bipartisan retirement security legislation since both lawmakers served in the House. Their bipartisan actions helped move the SECURE Act to final enactment and have helped set the stage for possible action on SECURE 2.0 this year.
  • Representative Kevin Brady (R-TX). Representative Brady, currently the ranking Republican on the House Ways and Means Committee, partnered with current Ways and Means Committee Chair Richard Neal (D-MA) to help move the SECURE Act to final enactment and co-sponsor the House-approved Securing a Strong Retirement Act (H.R.2954). His committee position has also extended his influence on other benefit-related changes in recent years.

In congressional committees, including those with primary jurisdiction over benefit-related issues, important changes will occur. Some possible changes that could affect benefit-related committees in the 118th Congress include:

  • New leadership at the Senate Health, Education, Labor and Pensions Committee:
    • Senator Patty Murray (D-WA) currently chairs the Senate’s Health, Education, Labor and Pensions (HELP) Committee, which has jurisdiction over ERISA. She has had a strong interest in healthcare, retirement, paid leave, workforce protections, and other benefit and workforce issues. She is expected to succeed retiring Senator Patrick Leahy (D-VT) as the chair of the Senate Appropriations Committee. Senator Bernie Sanders (I-VT), who currently chairs the Senate Budget Committee, has announced that he will seek the top seat on the committee.
    • Senator Richard Burr (R-NC) is currently the ranking Republican on the Senate HELP Committee. He is retiring at the end of the 2022 legislative session. Senator Bill Cassidy (R-LA) plans to seek the ranking Republican seat.
  • A new top Republican (and possibly a new committee name) at the House Education and Labor Committee:
    • Representative Virginia Foxx (R-VA) has served three terms as the highest ranking Republican on the House Education and Labor Committee. House Republicans limit members to three terms as chair and/or ranking member of a committee, so she will have to step aside from the top seat next year unless she receives a waiver. Representative Tim Walberg (R-MI) could chair the committee.
    • Representative Bobby Scott (D-VA) currently chairs the committee and is expected to be the ranking Democrat on the committee.
    • The committee’s name may change.

Outgoing Congress must wrap up work for 2022

Before the 118th Congress commences in early 2023, the current Congress will return to session to finish its work for 2022. Government funding expires on December 16, so Congress must approve new government funding.

Congress may also consider a broader year-end package. If so, the SECURE 2.0 retirement package is expected to be under consideration. Lawmakers will be working to reconcile differences between the retirement bills approved by the House, the Senate Finance Committee and the Senate HELP Committee and develop a unified bill that could be attached to a year-end package.3

Other provisions with implications for employers could be under discussion during the post-election legislative session, including healthcare and tax provisions. It is not yet clear which provisions may move through Congress during the remaining weeks of the 2022 session, and it’s possible that final details will be settled in the last days before the current Congress adjourns.

Going forward

Companies should watch for and monitor additional developments once election results are finalized and lawmakers begin to organize and set the agenda for the 118th Congress.

Footnotes

1 For more information on the “family glitch” loophole in the Affordable Care Act, see “IRS finalizes ‘family glitch’ fix,” Insider, October 2022.
2 For more information on the Inflation Reduction Act, see “Inflation Reduction Act retirement and prescription drug benefit implications,” Insider, August 2022.
3 For more information on SECURE 2.0, see “Senate Finance Committee approves SECURE 2.0 legislation,” Insider, July 2022.

Authors

Senior Legislative Advisor

Senior Director, Retirement and Executive Compensation

Senior Regulatory Advisor, Health and Benefits

Senior Director, Executive Compensation

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