Medical Flexible Spending Account Improvement Act Would Replace Forfeiture with Cash Out Plan
WASHINGTON, March 11, 2011 /PRNewswire-USNewswire/ -- Congressmen Charles Boustany (R-La.) and John Larson (D-Conn.) yesterday introduced the Medical Flexible Spending Account Improvement Act (H.R. 1004), a bill that would allow consumers to withdraw and pay taxes on any remaining funds in their medical flexible spending accounts (FSAs) instead of forcing them to forfeit the remaining balance to their employer, as current rules require.
FSAs are pre-tax accounts funded by employee contributions that can be used to pay for qualified medical expenses. The IRS adopted the forfeiture or "use it or lose it" provision to prevent FSAs from being misused as tax shelters; however, a new $2,500 cap on FSA contributions set to begin in 2013 as required by the Patient Protection and Affordable Care Act eliminates the need for that concern.
Save Flexible Spending Plans, an advocacy campaign that works to promote the accessibility and use of FSAs, applauded the bill's sponsors for their attention to the issue.
"As the price of health care continues to climb, FSAs help millions of working Americans manage and hold down their out-of-pocket costs," said Joe Jackson, chairman of Save Flexible Spending Plans and CEO of benefits provider WageWorks, Inc. "Unfortunately the 'use it or lose it' rule creates an unnecessary risk for FSA participants and a deterrent for non-participants. A change to this rule ensures that individuals will not be forced to use up or forfeit any remaining funds simply because their families' needs did not match their predicted annual health care expenses."
Reps. Boustany and Larson echoed the same sentiment in a letter to their colleagues in Congress.
"Over 85 percent of large employers offer FSAs but only 20-22 percent of eligible employees enroll," stated the representatives. "The principal reason for not enrolling, or for underfunding accounts is fear of the 'use-or-lose' provision."
Additionally, the bill's sponsors noted that one quarter of participants forfeit some of their FSA funds every year.
"In considering changes to improve our health care system, removing 'use it or lose it' is an easy fix," added Jackson. "We hope members of Congress will move quickly to join Reps. Boustany and Larson in their effort to make FSAs even more accessible and consumer-friendly."
About Save Flexible Spending Plans
Save Flexible Spending Plans is a national grassroots advocacy campaign to protect the accessibility and use of flexible spending accounts (FSAs). The campaign is sponsored by the Employers Council on Flexible Compensation (ECFC), www.ecfc.org, a non-profit organization dedicated to the maintenance and expansion of private employee benefit programs on a tax-advantaged basis. To learn more, take action and read the personal stories of FSA participants, please visit www.savemyflexplan.org.
WageWorks, Inc. is the nation's largest independent provider of consumer-directed benefits solutions. Products include: flexible spending accounts (FSA), health reimbursement accounts (HRA), health savings accounts (HSA), COBRA and commuter products and services. WageWorks is the only company to deliver a completely integrated spending account solution. It offers products on a single platform with built-in debit cards for health care and convenient account management tools such as electronic-bill payment, cash reimbursement and transit-pass home-delivery services. This reduces the cost of plan administration, while maximizing plan participation and value for employees.
WageWorks is headquartered in San Mateo, California, with offices in major locations throughout the United States. For more information, please visit the website at www.wageworks.com.
SOURCE Save Flexible Spending Plans