What better way to honor the dignity of hardworking Americans than to help them ensure their economic security through their workplace benefits. This year we took two major steps toward helping our workers address their greatest economic concerns – saving for retirement and accessing and paying for health insurance.
On retirement savings our new rule on association retirement plans allow small businesses to band together to offer retirement plans as if they were a single large employer. On health insurance, our new rule on health reimbursement arrangements (HRAs) will provide hundreds of thousands of employers, including small businesses, a better way to provide health insurance coverage, and millions of American workers more options for health insurance coverage.
Retirement security remains a serious concern for Americans and workplace savings plans have proven the best way for workers to save and invest. Despite working full time, however, about 38 million full-time private-sector employees do not have access to a workplace retirement plan. That is a problem that we needed to fix. The Trump Administration recognized that while many employers would like to offer plans, the cost and complexity have proven difficult to manage while they go about the day-to-day tasks of running and growing their business.
On Aug. 31, 2018, President Trump signed an executive order making it the “policy of the federal government to expand access to workplace retirement plans for American workers.” He directed the Department of Labor to cut through red tape, reduce regulations and make it easier for small businesses to offer retirement plans to their employees.
The Labor Department responded to the directive to help small businesses offer retirement savings options to their employees at a better price. Under the new rule, the administration has made it easier for small businesses, including the self-employed, to band together in groups or associations to offer retirement plans as if they were a single large employer. By banding together, employers will benefit from the increased bargaining power and the ability to offer their employees 401(k) options with lower fees that come with a larger participant pool. Our new rule also expands these benefits to the self-employed.
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The bottom line is that empowering association retirement plans is a commonsense step that the Trump Administration is taking to help more American workers developing a winning plan for achieving retirement income security.
As for health care coverage, access to, and cost of, health insurance top virtually every survey of workers’ economic concerns. The administration took those concerns to heart and on October 12, 2017, President Trump signed an executive order to expand employers’ ability to offer health insurance options to their employees. The Departments responded to the president’s directive with regulations that will permit employers to offer individual coverage HRAs as an alternative to traditional group health plan coverage.
As businesses have struggled with the high costs and complex bureaucracy of providing health insurance coverage, many have stopped providing benefits, leading to less coverage for workers. We estimate that once employers fully adjust to the new rules, roughly 800,000 employers – most with fewer than 20 employees — will offer individual coverage HRAs to pay for insurance. HRAs will benefit more than 11 million employees and family members, including an estimated 800,000 Americans who were previously uninsured.
Our new HRA (health reimbursement arrangements) rule will provide millions of workers and their families a better way to obtain coverage and provide more options for selecting health insurance coverage that better meets their needs. Using an individual coverage HRA , employers will be able to provide tax-preferred funds to pay all or a portion of the cost of coverage that workers choose themselves in the individual market. HRAs will increase workers’ choice of coverage and increase portability of coverage, while making it easier for small businesses to compete by creating another option for financing health coverage for their employees.
Together, these two commonsense rules will mean that more workers will save for retirement and get the health benefits they need. That’s an important step in respecting the dignity of the hard work done every day by America’s workers.