Compliance December 17, 2012

IRS Issues 2012 Cumulative List

December 17, 2012 (PLANSPONSOR.com) – The Internal Revenue Service (IRS) has issued the 2012 Cumulative List of Changes in Plan Qualification Requirements.
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Plans using this Cumulative List will primarily be single employer individually designed defined contribution (DC) plans and single employer individually designed defined benefit (DB) plans that are in Cycle C, and § 414(d) governmental plans (including governmental multiemployer or governmental multiple employer plans) that choose to file during Cycle C.    

The IRS said it will not consider in its review of any determination letter application for the submission period that begins February 1, 2013, any guidance issued after October 1, 2012; statutes enacted after October 1, 2012; qualification requirements first effective in 2014 or later; or statutory provisions that are first effective in 2013, for which there is no guidance identified in the notice.    

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However, the agency noted, in order to be qualified, a plan must comply with all relevant qualification requirements, not just those on the 2012 Cumulative List.  

Notice 2012-76 is at http://www.irs.gov/pub/irs-drop/n-12-76.pdf.
Benefits December 17, 2012

Buck Reports Improved Health Plan Cost Increases

December 17, 2012 (PLANSPONSOR.com) – Projected cost increases for all types of medical plans are anticipated to be down by between 0.2% and 0.6% through the first half of 2013, according to a survey.
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This year is the first time since 2001 that Buck Consultant’s survey indicated projected cost increases less than 10% for any plan type, a trend that will continue into 2013.  

The survey found a projected cost increase for Preferred Provider Organization (PPO) plans of 9.7% compared to 9.9% last year. For Point-of-Service (POS) plans, the projected cost increase is 9.5%, down from 9.9%.

Health Maintenance Organization (HMO) plans are projected to see a cost increase of 9.3%, and High Deductible Health Plans (HDHP) 9.6%, both down from 9.9% last year. 

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“Despite the lower trend, though, health care costs continue to outpace general inflation—creating difficult business decisions for organizations,” said Daniel Levin, FSA, a Buck principal and consulting actuary who directed the survey.

Health insurers reported an average prescription drug trend of 10.1%, an increase of 0.5% from the prior survey. It is also more than twice the 4.1% reported by pharmacy benefit managers (PBMs)—third-party administrators of prescription drug programs, who generally do not take any underwriting risk. The continued shift to generic drug use is a significant factor in the reduced drug trends shown by PBMs.

For plans that supplement Medicare, health insurers reported a trend of 5.4% excluding prescription drug coverage, down from 5.8% in the prior survey. This lower trend of Medicare Supplement plans reflects the impact of federal controls on Medicare fees and the lower increases expected in Medicare deductibles and co-pays.

“Another health care trend we’ll be watching is the impact of private health insurance exchanges,” said Levin. “It remains to be seen how the development of private exchanges will affect the use of public exchange models, but it could likely impact the projected cost trends we measure in this survey.” 

The survey also reported trend factors for dental and vision plans.

Buck’s 25th “National Health Care Trend Survey” is available for $100 by calling 1-800-887-0509 or visiting www.bucksurveys.com.

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