We propose a motion compensation (MC) scheme that outperforms the MC technique specified in the emerging ITU-T coding standard, H.26L. The proposed MC scheme is based on a motion boundary model that uses two different time/frame references for arbitrarily bisected regions within each macroblock. The motion boundary model increases MC efficiency especially for the incoherent moving regions caused by the intersection between foreground and background objects; the current H.26L's "motion boundary insensitive MC", on the other hand, allows only one reference frame for all segments within a macroblock to be predicted. Experiments show that the proposed MC scheme can reduce the bit rate by up to 5.9% compared to the current H.26L, without increase of decoding complexity.