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December 5, 2006
Important: New Notice Requirements for Defined Contribution Plans
Notice of Automatic Enrollment
November 1, 2006
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:
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.
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.
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.
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.
Projected 2007 Cost of Living Adjustments for Certain Benefit Plans
Following are 2007 projected cost of living increases for HSAs, MSAs, long term care and qualified transportation. These are based on the Consumer Price Index (CPI) recently issued. Important to note, these are not the official figures from the IRS; they are projections. As soon as the official figures have been issued, we will provide them to you.
Medicare Premiums and Deductibles for 2007
The Centers for Medicare and Medicaid Services have released the Medicare premium and deductible amounts for 2007.
September 6, 2006
HSA Guidance Again! Comparability Rules
As promised, the health savings account (HSA) rules relating to employer contributions have been finalized. If an employer makes a contribution to the HSA of employees, the employer must satisfy what are known as the comparability rules. The final HSA comparability rules make several significant modifications to the proposed regulations issued in August, 2005.