I am starting to work with 16 bit NEF images and it apears that most of the PSE effects don't support 16bit color. PSE keeps telling me I need to convert to an 8 bit image. Is there a setting I need to change? If not is PSE 2020 working to support 16 bit images? I know that the CR plugin seems to handle the 16bit image with some missing features but still using the 16bit data.
What you have to keep in mind about PSE and 16-bits:
1 - Elements supports 16-bits for all global edits and most filters (where 16-bits is meaningful)
2- Elements does not support any local or detail tool in 16-bits (where 16-bits is useless)
3 - Elements does not support layers in 16-bits which may or not be critical. Using normal mode for compositing (scrapbooking) does not require 16-bits whereas using strong blend modes can be very harmful and create posterization.
The ACR plugin works internally in 16-bits mode and wide gamut color mode.
Nearly all missing features in the Elements ACR plugin are available in the normal pixel editor. So it's obvious for me that your best workflow is to work in the ACR module to take advantage of the raw and non-destructive parametric editing for all global edits. You'll no longer suffer from posterization which is the main risk of 8bits. Then set the ACR dialog to export in 8-bits in Elements editor via the 'Open' button. Everything is now available without creating needlessly huge file sizes.
If you don't trust me, Adobe will be very happy to see you subscribe to the photography plan, which is admittedly theoretically better.