Senate Bill Would Allow Consumers to Pay Taxes, Keep Remaining FSA Funds
WASHINGTON, July 22, 2011 /PRNewswire-USNewswire/ -- Today, Senators Ben Cardin (D-Md.) and Mike Enzi (R-Wyo.) introduced the Medical Flexible Spending Account Improvement Act (S. 1404), a bill that would allow consumers to pay taxes on and withdraw any remaining funds in their employer-sponsored flexible spending accounts (FSAs). Current rules require that any leftover balance in an FSA must be forfeited to the employer at the end of the plan year.
The bill is the Senate counterpart to H.R. 1004, which was introduced with bipartisan support in March by Reps. Charles Boustany (R-La.) and John Larson (D-Conn.).
During his introduction of the bill, Sen. Cardin said, "It is time to modernize FSAs to eliminate this burdensome 'use it or lose it' rule. It is both fair and sound health policy to allow FSA participates to cash-out remaining funds at the end of the plan year rather than forfeiting the balance to their employer."
Save Flexible Spending Plans, an advocacy group that hopes to make FSAs more accessible to consumers, commended Sens. Cardin and Enzi for their introduction of the bill.
"FSAs help millions of Americans manage and reduce their out-of-pocket health care costs," said Joe Jackson, chairman of Save Flexible Spending Plans and CEO of benefits administration service provider WageWorks, Inc. "However, the 'use it or lose it' rule creates an unnecessary risk for FSA participants and a deterrent for non-participants. Changing this rule will ensure that participants don't lose their hard-earned money if their out-of-pocket health care costs don't match their prediction for the year."
In addition, the bill's sponsors noted that the original reason for adopting the "use it or lose it" provision is no longer relevant. The IRS adopted the provision to prevent FSAs from being misused as tax shelters. But according to Sen. Cardin, "with the enactment of the Patient Protection and Affordable Care Act in 2010, annual contributions to FSAs will be capped at $2,500 beginning in 2013, which makes the 'use it or lose it' rule unnecessary."
Jackson urged members of Congress to join their colleagues in the House and the Senate by supporting the elimination of the FSA "use it or lose it" rule.
"The 'use it or lose it' provision hurts consumers and can promote unnecessary health spending. We hope that Congress will follow the bipartisan leadership of Senators Cardin and Enzi and eliminate this unnecessary penalty on consumers," he said.
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 a leading on-demand provider of tax-advantaged programs for consumer-directed health, commuter and other employee spending account benefits, or CDBs, in the United States. We administer and operate a broad array of CDBs, including spending account management programs, such as health and dependent care Flexible Spending Accounts, or FSAs, Health Savings Accounts, or HSAs, Health Reimbursement Arrangements, or HRAs, and commuter benefits, such as transit and parking programs.
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 WageWorks, Inc.