How might the new Congress impact employee benefits?

1. Taxes

Major tax legislation is expected in 2025, driven by the need to extend expiring individual and corporate tax provisions and respond to a new international tax regime implemented by other modern economies. Funding the extension of those tax provisions may require cuts in spending or raising taxes in other areas, including possibly a haircut on the amount insurers can deduct for reserves — or even capping the deduction for employer-sponsored benefits. That’s why protecting employer-sponsored benefits is the industry’s top priority heading into 2025.

2. Paid Family Medical Leave

An incentive for businesses offering PFML benefits is among the corporate tax provisions we expect will be extended and enhanced. The likelihood of a national program is diminished, as such sweeping legislation requires compromise that can be difficult to achieve when one party is in control. As in previous congressional debates, we advocate for strong, public-private partnerships that leverage the existing benefits infrastructure through meaningful private sector solutions. Meanwhile, states continue to pass and implement their own plans, most often recognizing the important role of private insurance. For more, see Unum’s pre-election analysis on what a Trump administration means for PFML: Exploring the 2024 election’s impact on PFML | Unum.

3. Voluntary Benefits

The Biden Administration proposed a “"Tri-Agency Rule” that significantly changed the structure and taxation of Hospital Indemnity insurance. The industry engaged in a substantial advocacy campaign, and the final rule was amended to set aside the offending provisions and only requires a disclosure. However, language was included in the rule indicating an intent to revisit the issue. With the change in administration, this issue is likely off the table at the federal level for the next four years. However, this is another prime example of where activity might pick up in the states.

4. Long-term care insurance

Voters in Washington state rejected a ballot initiative that would have made the Washington Cares LTC program voluntary. The result preserves the state’s public LTC insurance program and fends off the measure most believed would have risked the program’s survival. LTC is not currently on the agenda of Congressional Republicans or the incoming Trump administration. Much like we’ve seen in the states, the lack of affordable solutions translates into the low probability of any federal progress. This means that attention remains on the states. Several states are expected to reintroduce state-run LTC legislation in 2025, but as in previous years, the likelihood of enactment remains low. Nonetheless, voters’ affirmation of the WA Cares program and reaction to a lack of federal activity may lead to increased focus for some states. California and Minnesota completed studies on the issue in 2024, while a study is underway in Massachusetts. Pennsylvania and New York introduced legislation in 2024 that we might expect to reemerge in the new year.

5. Mental health parity for long-term disability insurance

A panel that advises the Department of Labor on policy matters conducted a series of hearings in 2023 on the two-year mental and nervous limitation typical in long-term disability insurance policies. The panel recommended that Congress pass legislation requiring parity for mental health benefits. No such legislation has been introduced in Congress, and we don’t expect the Republican majority to prioritize the matter. Meanwhile, the issue has gained traction at the state level and seems ripe for activity in 2025. In Minnesota, an outright prohibition was avoided. Instead, legislation was passed that establishes new disclosures about coverage options. Similar legislation remains active in Massachusetts. Recognizing the importance of mental health, further analysis is warranted exploring potential impacts to cost and overall coverage levels to avoid unintended consequences arising from well-intentioned policy at the state or federal level.

Want to explore these issues further?

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