In 2025, President-elect Donald Trump's administration will begin implementing its agenda. The new administration's priorities and positions on certain benefits-related issues are expected to take a dramatic shift from those of the Biden administration. This article discusses some of the benefits-related issues that are expected to be impacted by the new administration.
Fiduciary Rule
In 2024, the Department of Labor (DOL) published a final rule defining "investment advice fiduciaries" and "investment advice." The new rule expanded these definitions leading to an increased possibility that certain service providers and financial institutions could be characterized as fiduciaries subject to ERISA's fiduciary scheme. Two federal courts issued a hold on the DOL's final rule. It is expected that the Trump administration will decline to defend the rule in court and withdraw it.
Environmental, Social, and Governance Rule
In 2022, the DOL published a final rule explicitly allowing plan fiduciaries to consider environmental, social, and governance (ESG) factors when selecting retirement investments and exercising shareholder rights. The DOL issued the rule in response to President Joe Biden's executive order setting forth policies to mitigate climate-related financial risk as well as actions to help safeguard the financial security of America's families, businesses and workers from climate-related financial risk. It is expected that the Trump administration will roll back the final rule to limit plan fiduciaries' ability to consider ESG factors when selecting retirement investments.
Section 1557 Rule
In general, Section 1557 of the Patient Protection and Affordable Care Act prohibits a health plan that receives federal financial assistance from excluding an individual from participation in the plan on the basis of certain characteristics including on the basis of sex. Since 2016, the Department of Health and Human Services (HHS) has issued regulations, in part, interpreting Section 1557's prohibition on discrimination "on the basis of sex." Based on the administration at the time the rules were issued, the rules either expanded or narrowed how HHS interprets "on the basis of sex."
In 2024, HHS issued a final rule providing that discrimination on the basis of sex includes discrimination on the basis of sexual orientation, gender identity, sex characteristics (including intersex traits), pregnancy or related conditions, and sex stereotypes. Before the final rule took effect, a court issued a hold on certain provisions of the final rule. It is expected that the Trump administration will decline to defend the rule in court and withdraw it.
Transgender Affirming Care for Minors
In December 2024, the U.S. Supreme Court heard oral arguments in U.S. v. Skrmetti. The case involves a challenge to a Tennessee law that bans certain treatments for transgender affirming care for minors. The federal government argued that the Tennessee law is unconstitutional under the equal protection clause of the 14th Amendment. The Supreme Court will not likely issue a decision until next summer. It is expected that the Trump administration will reverse the federal government's position in the case before the Supreme Court issues its decision, which may lead to the Court dismissing the case and upholding the Tennessee law.
* * *
If you have questions or concerns regarding this client alert, please contact the authors, or any member of Venable's Employee Benefits and Executive Compensation Group.