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Archive for May, 2011

(MyHealthGuide Source: Milliman, Inc., 5/11/2011, www.milliman.com Seattle)

 Milliman, Inc., a premier global consulting and actuarial firm, released the results of the 2011 Milliman Medical Index, which measures the total cost of healthcare for a typical family of four covered by a preferred provider organization (PPO). The 2011 MMI cost is $19,393, an increase of 7.3% over 2010, which is the lowest annual rate of increase in more than a decade. Yet even though the rate of increase is the lowest in recent memory, the increase in total dollars–$1,319 in 2011–is the highest in the history of this study. “In 2002, American families had healthcare costs of $9,235, and those costs have now doubled in fewer than nine years,” said Lorraine Mayne, Milliman principal and consulting actuary. “As costs continue to grow–and even as the cost trend decelerates–the total cost of care for American families constitutes a larger and larger portion of the household budget.” Of the $1,319 total cost increase, employers bore $641 while employees shouldered the rest–$403 in payroll contributions and $275 in additional cost sharing. “As has been the case in four of the last five years, employees are paying a larger share of the cost increase than their employers,” said Scott Weltz, consulting actuary at Milliman. “That said, in absolute dollars, both employers and employees have shouldered approximately the same amount of additional costs since 2006, with employers absorbing $3,023 and employees absorbing $2,988.” In addition to looking at costs on a nationwide basis, the Milliman Medical Index also examines 14 geographic areas. “This year, six of the fourteen cities we studied exceeded $20,000 in total costs for a typical family of four,” said Milliman principal and consulting actuary Chris Girod. “But we still have several cities, Phoenix, Atlanta, and Seattle, with less than $19,000 in total costs for the typical family. These cost differences result from variation in local practice patterns and from differing costs for healthcare goods and services.” This years Milliman Medical Index also helps put healthcare reform changes in perspective, and includes various analyses of how healthcare reform is (or is not) contributing to the underlying cost of care. The report also looks at how healthcare reform changes may affect the typical family of four represented in this analysis.

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Employer groups will be responsible for reporting to employees the total cost of their group health benefit plan coverage on 2012 W-2 forms, which is information employers must report to employees in January, 2013. 

Effective Date and Purpose

  • The guidance generally applies beginning with 2012 Forms W-2 that employers must provide to employees in January 2013. Forms W-2 provided to employees terminating during 2012 and requesting a Form W-2 prior to the end of the calendar year need not comply with the new requirements. This exception also applies to future years, until further IRS guidance is issued.
  • Employer-provided health coverage will remain non-taxable to employees (except for special situations, such as domestic partner or other non-dependent imputed income).
  • The purpose of the new W-2 information is to provide employees information on the cost of their health care coverage.
  • There are exceptions for certain tribal governments, churches and small employers (required to file fewer than 250 Forms W-2). Multiemployer plans are exempt from the reporting requirement until further guidance.

Scope of Health Plan

  • Employers can exclude the value of health reimbursement accounts and separate dental and vision plans when they report for 2012 – and future years – until the IRS issues further guidance.
  • Also excluded are health flexible spending accounts and HSAs. However, any employer contributions (not salary reduction) made to the health flexible spending account would be included.

We realize this is one more law that has moved ahead a year.  We at Trilogy Benefits want to keep you updated with the latest information; however, we do not want to boggle your already busy schedules with legislative mandates that are certain to change.  This ruling, in particular, is very important and affects all of us.  We will keep you posted as more legislation develops around employer mandates.

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