Physicians Pension Plan could come up short on funding for 2009 due to Medicare Cuts

[Lori H]

Physicians group has two plans Safe Harbor 401(k) and Money Purchase. Yes, they have been told to terminate the pension plan in the past, but "liked the investments". Now that medicare has cut their payments by 21% and possibly more, they are scrambling. They are having a hard time paying rent, much less the $437,000 contribution receivable that is due for the plan year ending 12/31/09.

Going forward would a good course of action be to issue a Section 204(h) notice asap, freeze the plan, therefore limiting their 2010 plan year funding for the date the freeze took affect? They will have to fund based on comp paid to eligible participants up to that date. They could then rollover the assets into the Safe Harbor plan or merge the plans?

For 2009 I believe there will be a 10 percent excise penalty involved on the UNPAID amount if they can not fund the plan by 8 and a half months after the plan year(Sept 15). I assume a lot of physicians will have problems due to the new medicare cuts. This particular plan has 51 participants. Has anyone had problems with pension plan funding? Do you think these reasons would be reason to apply for a waiver? Probably not. And I would assume the plan could not be merged with the Safe Harbor until the funding was made?

[PensionPro]

You may be able to request a funding waiver for 2010 based on 'business hardship'. See Rev. Proc. 2004-15, esp. Section 3.

[david rigby]

Now that medicare has cut their payments by 21% and possibly more, ...

It is my understanding that the "Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010" reversed expected cuts in Medicare payments. Have I missed something?

[Lori H]

You may be able to request a funding waiver for 2010 based on 'business hardship'. See Rev. Proc. 2004-15, esp. Section 3.

Now that medicare has cut their payments by 21% and possibly more, ...

It is my understanding that the "Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010" reversed expected cuts in Medicare payments. Have I missed something?

I think so David. Further cuts may be on the horizon too according to physicians in my area.

[MARYMM]

Now that medicare has cut their payments by 21% and possibly more, ...

It is my understanding that the "Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010" reversed expected cuts in Medicare payments. Have I missed something?

I think it was a temporary reprieve thru this November

[david rigby]

I think it was a temporary reprieve thru this November.

It's been a temporary reprieve for several years, with Congress scheduling a future date for the reduction, followed by a (usually) last-minute deferral of the cut.