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December 15, 2006

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IRS Notice 2007-02: Transition Relief for Use of Debit Cards for Medical Expense Reimbursements (PDF)
4 pages; allows use of debit cards under medical expense reimbursement arrangements at supermarkets, grocery stores, discount stores or wholesale clubs that do not have a merchant category code related to health care, through Dec. 31, 2007. Absent the relief, IRS Notice 2006-69 would have required such merchants to have an inventory information approval system in place. Correction procedures for any improper payments continue to apply, as required by Rev. Rul. 2003-43. (Internal Revenue Service)

IRS Loosens, Then Tightens, Rules for Debit Card Use with Medical Expense Reimbursement Arrangements (PDF)
2 pages. Excerpt: "While the IRS relaxed the rules, albeit temporarily, for supermarkets and retail stores, it simultaneously tightened them for drug stores that sell a lot more than prescription drugs and health care supplies. Beginning in 2009, debit cards may no longer be used at drug stores -- even if they operate under health care merchant codes -- unless: . . ." (Lockton Benefit Group)

Telecommuters Reaching Out to Sue Their Employers
Excerpt: "A new class action brought by telecommuters of Cigna Healthcare of California Inc. who say they were denied overtime and severance pay highlights the growth of a new type of legal dispute facing companies across the nation." (The National Law Journal via

List of HSA Improvements Included in H.R. 6111
Excerpt: "Before the close of the 109th Congress, several important, technical improvements to Health Savings Accounts (HSAs) were included within H.R. 6111, The Tax Relief and Health Care Act of 2006." (U.S. Chamber of Commerce)

Overview: Changes on the Horizon for Health Savings Accounts
Excerpt: "The Act permits individuals with health Flexible Spending Arrangements (FSAs) or Health Reimbursement Arrangements (HRAs) to rollover their funds into an HSA for a limited time. The maximum amount that may be rolled over is the lesser of (i) the balance in the health FSA/HRA as of September 21, 2006, or (ii) the balance in the health FSA/HRA as of the date of the rollover." (McDermott Will & Emery)

Overview: The Tax Relief and Health Care Act of 2006
Excerpt: "In the last days of their 2006 'lame duck' session, Congress passed the Tax Relief and Health Care Act of 2006 (the 'Act'), which the President is expected to sign. The Act extends many important tax provisions, but also includes many new provisions for Health Savings Accounts ('HSAs')." (CCA Strategies, LLC)

Overview of New HSA Rules for 2007
Excerpt: "The 109th Congress went out with a bang early on Saturday morning, December 9th (5:00am exactly), when it passed new HSA provisions effective January 1, 2007. While most of the changes are good news for employers sponsoring or considering HSAs and other forms of Consumer-Directed Health Plans (CDHP) and for their employees, there are some items that will require close scrutiny and action." (Kushner & Company)

Overview: Congress Passes the Tax Relief and Health Care Act of 2006 (PDF)
3 pages. Excerpt: "Prior to the Act, the maximum contribution to an HSA that an employee could make was limited to the lesser of: (1) the employee's deductible; or (2) a statutory maximum ($2,850 for single coverage; $5,650 for family coverage (2007 figures)). The Act removes the reference to the employee's deductible. Thus, the maximum aggregate annual contribution that can be made to an HSA is $2,850 (in 2007) for single coverage and $5,650 (in 2007) for family coverage." (Michael Best & Friedrich LLP)

Medical Data Travels Far and Wide on a Typical Day -- Vulnerable at Each Handoff
Excerpt: "Since the April 2003 deadline for complying with the privacy rules of the Health Insurance Portability and Accountability Act (HIPAA), 23,268 complaints about alleged breaches of patient privacy have been lodged with the U.S. Department of Health and Human Services (HHS), which is responsible for enforcing HIPAA." (Baseline)

Vermont Funding Program to Subsidize Private Employer Health Plans for Some on Public Insurance
Excerpt: "The Vermont Legislature's joint Fiscal and Health Access Oversight committees on Tuesday voted to release $750,000 in funding for a program that would shift an estimated 1,068 state residents from public health insurance programs to employer-sponsored health coverage, the Burlington Free Press reports." (Kaiser Family Foundation)

Prescription Drugs: Improvements Needed in FDA's Oversight of Direct-to-Consumer Advertising
52 pages. Excerpt: "GAO recommends that FDA (1) document criteria for prioritizing DTC materials for review, (2) systematically apply its criteria to materials it receives, and (3) track which materials it reviews. [Highlights of the report are at]" (U.S. Government Accountability Office)

State Legislators Seek Alternatives to 'Fair Share' Laws
Excerpt: "This year 28 states introduced 'pay to play' legislation that would have required large employers to spend a certain amount of their payroll on health care. Fifteen of the proposals were near carbon copies of Maryland's Fair Share Health Care Act, which passed that state's legislature in January." (Workforce Management; free registration required)

A PricewaterhouseCoopers White Paper: Rethinking Postretirement Benefits (PDF)
24 pages. Excerpt: "This publication offers three closely related discussions: An overview of the business, social, and political implications of today's changing array of postretirement benefits. A technical discussion of the postretirement accounting project on the agenda of the Financial Accounting Standards Board (FASB). And a concluding exercise: thinking about these issues from a strategic perspective." (PricewaterhouseCoopers LLP)

Links to Items on Executive Comp, Benefits in General

Other Companies Don't Choose to Adopt Google's GOOG New Transferable Stock Options Program
Excerpt: "When Google Inc. announced a new wrinkle in granting employee stock options earlier this week, executives at the search engine said they believed they were creating an employee compensation model that other companies would soon adopt. But so far, Google's GOOG new transferable stock options program have hit a brick wall with some major technology firms, which include some of the likeliest candidates to follow Google's lead." (MarketWatch via NewsEdge Corporation via Human Resource Executive Online)

New Rules Go Into Effect Today Requiring Companies to Clearly Explain Compensation Practices
Excerpt: "The new regulations mark the biggest change to corporate pay disclosure in 25 years. They will force companies to release more information about different kinds of compensation and to more clearly justify those payments." (The Washington Post; free registration required)

A Review of Employee Benefits Developments, November 2006
This edition of the newsletter includes: Rulings, Opinions, Cases titled: IRS issues final regulations on the use of electronic notices and elections; Update from IRS on per diem business expenses for lodging, meals, and incidental expenses; Reducing volatility of plan investments may be part of prudent investment strategy; DOL guidance on health savings accounts: Are HSAs subject to ERISA?; and Immaterial omission does not invalidate beneficiary designation. (Hodgson Russ LLP)

Overview: 2005 and 2006 Violations of 409A Trigger Last Minute Reporting and Withholding Obligations (PDF)
4 pages. Excerpt: "The Notice makes clear that it has no impact on the FICA treatment of nonqualified deferred compensation subject to Code section 3121(v)(2) and does not address FICA treatment for other amounts (e.g., discount options)." (Groom Law Group)

Governmental Plans Answer Book, Second Edition, Published
The Governmental Plans Answer Book remains the only full-length book devoted to legal questions affecting the pension and retirement systems of state and local government employers. The Second Edition, published November 22, 2006, updates the information in the book to reflect federal, state, and local legal and practical developments since the original edition was published in 2002. (Calhoun Law Group, P.C.)

Newly Posted Events
(Post Yours!)

Income Tax Accounting and Compensation and Benefits: Make Sure You Know Where You Stand
in California on January 10, 2007
presented by Deloitte

Newly Posted Press Releases
(Post Yours!)

Industry Leaders Announce Personal Health Record Model
America's Health Insurance Plans (AHIP)

Freddie Mac Offers Back-Up Elder Care for Employees
Freddie Mac

SEI Releases 2007 Update of FAS 87 Disclosure Assumptions Research for Pension Plan Sponsors

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Benefit Calculation Developer
for Vanguard
in PA

Retirement Plan Professional
for RG Wuelfing & Associates
in NC

Pension Recordkeeper
for Guidant Financial Group, Inc
in WA

Profit Sharing and 401(k) Administrator
for Goldberg, Swedelson & Associates, Inc.
in CA

Daily 401k Plan Administrator
for The Newport Group
in NC

Defined Contribution 401(k) Plan Administrator
for Certified Financial Group, Inc.
in FL

Department Head - Institutional Client Services
for Consistently ranked one of the 100 Best Companies to Work for in America.
in AZ

Plan Document Specialist
for Louis Kravitz & Associates
in CA

Account Manager, Employee Benefits
for ABD Insurance and Financial Services
in CA

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