New research shows that fewer parents are focused on preparing their children for college. The Know Before You Go Act may move the needle on public opinion away from college, which may have a significant impact on how families save for retirement.
Last month, we discussed potential legislative changes to clarify areas in retirement plan law that were murky by the Secure Act 2.0’s quick passage. We noted that portions of the law concerning catch up contributions and collective investment trusts were both the subject of new legislation.[1] That isn’t to suggest that other legislation or regulatory developments aren’t happening. Senator Marco Rubio of Florida and Representative Jack LaTurner of Kansas, both Republicans sponsored an identical bill that would make a few significant changes to HSAs.[2] One of those changes would be to exempt HSAs from creditor claims in bankruptcy and another would be to increase the limits on HAS contributions to match the sum of the annual deductible and out of pocket expenses permitted under a high deductible health plan.
Of significant importance, the bill would allow members of a health care sharing ministry to take part in an HSA. Health sharing ministries are nonprofits recognized under section 501(c)(3) of the Internal Revenue Code created as an alternative to required healthcare under the Affordable Care Act (ACA).[3] They share health care costs among members of a common religious or ethical group. While there are nearly 70,000 members enrolled in OneShare, a health care sharing ministry in La Turner’s Kansas, that pales in comparison to the role of Christian Care Ministry based in Florida. That organization reports to have 400,000 members who share more than $2.6 billion in medical expenses. Other health sharing ministry groups include Medi-Share, Zion Health, Samaritan Health and Christian Healthcare Ministries. Not all health sharing ministry groups are Christian. United Refuah Healthshare serves Jewish communities and Sedera is a non-religious group. According to some reports, there are more than 100 health sharing groups in the U.S. that shared $1.3 billion of medical expenses in 2021. There are just shy of 1 million Americans who are members of a Health Care Sharing organization.
Senator Rubio has apparently been busy, as he also introduced a bill this Spring along with Democratic Senators Ron Wyden of Oregon and Mark Warner of Virginia to help provide more data to families about higher education. As a press release from Senator Wyden’s office stated the legislation, previously introduced in the last congress, “would make the costs and outcomes associated with higher education clear in order to help students, families, policymakers and taxpayers.”[4] The press release went on to say that their bill, called the Student Right to Know Before You Go Act “makes data available to prospective college students about schools’ graduation rates, debt levels, how much graduates can expect to earn and other critical education and workforce-related measures of success. Importantly, under the bill, these outcome measures would be available and broken down by individual institution and program of study.”
At first that may not seem related to retirement planning, but it may further a trend we first discussed in January of 2023. In our discussion of what clients might want to know about the Secure Act 2.0,[5] we mentioned an important change to rollovers from section 529 accounts to Roth IRAs. “While at first the concept of taking from the tuition account to fund a retirement fund may bring a quick cringe, clients are mainly interested in this provision because of the flattening in the increase in tuition across the higher education industry… By 2022, public confidence in the power of a degree has decreased…. According to the Washington Post, Fewer than 1 in 3 Americans surveyed by the Strada Education Network now think a college degree is worth the cost. Overall, college enrollment continues to drop.” We went on to note that “[n]ew research shows that fewer parents are focused on preparing their children for college.” The Know Before You Go Act may move the needle on public opinion away from college, which may have a significant impact on how families save for retirement.
Legislation isn’t the only potential area for a change in regulation. As we noted in earlier newsletters and blog posts,[6]significant changes to recordkeeping may have been wrought by the Hughes v. Northwestern case decided by the Supreme Court. The Court has finished issuing its decisions this year and has now announced the cases it will hear in October. “The justices will hear just six cases over five days between Oct. 2 and Oct. 11. The session will, however, include several high-profile cases, such as the challenge to a purported racial gerrymander in South Carolina’s congressional map and a challenge to the constitutionality of the law providing funding for the Consumer Financial Protection Bureau.”[7] Inclusion of the CFPB case may answer other administrative authority cases that are also pending. As we stated in a newsletter to plan sponsors: “[A]dministrative agency authority is a source of tension. Rulings on one agency may signal limits on others that regulate plans and plan sponsors. Also, arguments made in court may signal potential legislation in Congress. Sometimes legislation is introduced to remedy issues not resolved in court….” We went on to say that “[i]n 2023, the major dispute over retirement plans involves the Department of Labor’s ESG rule.” Since that article, new efforts to change shareholder meetings have begun. That includes in Congress. “House Republicans unveiled a push last week aimed at changing how shareholder meetings work as part of their larger campaign against socially-conscious investing. The effort included a whopping 13 bills as well as two separate Congressional hearings devoted to the subject.”[8] This will clearly be an issue to follow this Fall.
[1] https://www.bcgbenefits.com/blog/secure-act-more-changes-coming
[2] These bills are Senate Bill S.1158 and House Bill H.R.2959.
[3] See my.onesharehealth.com
[5] https://www.bcgbenefits.com/blog/secure-act-clients-want-to-know
[6] See https://www.bcgbenefits.com/blog/increase-in-lawsuits and https://www.bcgbenefits.com/blog/compliance-concerns-hughes-vs-northwestern
[7] https://amylhowe.com/2023/07/14/justices-schedule-first-cases-of-the-2023-24-term
These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.
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