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December 5, 2006
Important: New Notice Requirements for Defined Contribution Plans
Notice of Automatic Enrollment
Smartcards and Debit Cards Allowed for Qualified Transportation Expenses
The IRS and Treasury Department issued Revenue Ruling 2006-57, explaining when a smartcard or debit card can be used to purchase qualified transportation benefits. Specifically, the Revenue Ruling provides several examples of what would constitute a permitted card. If a card with an embedded chip is purchased from a mass transit vendor with no more than the maximum $105 for 2006 ($110 for 2007) embedded in the card, the card could be used for mass transit without further substantiation.
2007 Cost-of-Living Adjustments for HSAs, MSAs and Other Benefits
In Rev Proc 2006-53, the IRS released several cost of living adjustments for various benefits. Following are amounts applicable to tax years beginning in 2007:
November 1, 2006
2007 Cost of Living Adjustments
Following are highlights of the 2007 cost-of-living adjustments issued by the IRS, applicable to defined benefit and defined contribution plans, as well as the 2007 Social Security limits.
Interactive Website for Compliance Assistance
The DOL has launched a compliance assistance website to help employers understand their responsibilities and obligations with regard to health benefit plans that they may sponsor. The website, known as the Health Benefits Advisor (http://www.dol.gov/elaws/ebsa/health), is set up as an interactive tool, and provides information about:
Reminder: Annual Medicare Part D Notices
The annual notices of creditable and noncreditable coverage to Medicare-eligibles must be provided no later than November 14, 2006. Notices to be used on or after May 15, 2006, as well as Creditable Coverage Guidance, are all available on-line from the CMS website: http://www.cms.hhs.gov/creditablecoverage.
New Tricare Provisions Affect Group Health Plans
Included in the Appropriations Bill recently signed by President Bush (the John Warner National Defense Authorization Act, Public Law 109-364), there are some new secondary payor rules applicable to group health plans. Specifically, the rules provide that Tricare is secondary to group health plans, excluding plans sponsored by employers with fewer than 20 employees. In other words, an individual covered by, or eligible for coverage under, Tricare must be given the same rights to participate in the group health plan as the individual not eligible for Tricare. In no way can the employer do anything to incent the individual to decline group health coverage in favor of Tricare. Significant penalties would be imposed for this kind of action. This law takes effect January 1, 2008.
More Guidance Relating to Electronic Notices and Elections
The IRS and Treasury Department have issued final regulations governing the use of electronic media for providing benefit notices and making elections and consents. These regulations make some modifications to the proposed regulations (see Benefit Beat, July 29, 2005 edition).
October 4, 2006
Default Investments: Great Expectations
One of the sections of the Pension Protection Act (“PPA”, P.L. 109-280) believed to be most important for purposes of augmenting retirement savings, is the default investment piece. This section of the law is intended to provide a plan sponsor with some degree of relief from liability for any losses due to investment selections made on behalf of plan participants. With the demise of defined benefit plans, and arguably, the weakening of Social Security, it is more and more incumbent upon individuals to save for retirement. To this end, the law encourages employer/plan sponsors to place as many individuals in retirement plans as possible.
Medicare Premiums and Deductibles for 2007
The Centers for Medicare and Medicaid Services have released the Medicare premium and deductible amounts for 2007.