Washington, D.C. – Flexible spending accounts (FSAs) are an important benefit for all workers. They allow employees to set aside pre-tax dollars to pay for out-of-pocket health care expenditures, including dental and vision services. However, workers’ unspent funds from their FSAs would normally revert to the employers at the end of the plan year. That is why Senators Ben Cardin and Mike Enzi, members of the Senate Finance Committee, introduced legislation in May that would allow employees who use health FSAs to cash out any remaining balance in their account at the end of a plan year.
Cardin and Enzi have long argued that Congress must ensure that workers have the option to have any unspent money that they put into their accounts returned to them at the end of the year. Late Thursday, the Department of Treasury issued a rule change that would give employers the ability to choose whether their employees could roll over up to $500 of their FSA fund to the following year, or provide a grace period to use available funds in the following year. This is a notable change from the “use-or-lose” policy that had been in place and the senators were encouraged saying that this is one step toward helping put families and consumers back in control of their health care decisions.
“I applaud the Treasury Department for listening to the needs of Americans and encouraging the use of flexible spending accounts. I was proud to join with Senator Enzi to spotlight how little sense it makes for employees who miscalculate their anticipated yearly out-of-pocket health care expenditures at the beginning of a plan year to have to forfeit those funds to their employer at the end of the year, if unspent,” said Senator Cardin. “Millions of private industry workers, as well as federal, state, county and local public sector employees who put their money into FSAs to help defray their out-of-pocket health care costs, saving money for themselves and their families, will benefit from these new guidelines. I urge the U.S. Office of Personnel Management to make this option available to federal workers.”
“While this change by Treasury is a good first step, it’s time to completely end use-it-or-lose it for flexible spending accounts and put families and consumers back in control of their medical decisions,” said Senator Enzi. “Congress should do everything it can to ensure that hard-working Americans don’t lose the money they put aside simply because their health costs were less than they anticipated. Medical FSAs encourage people to be proactive and plan ahead by putting money into these accounts for out-of-pocket costs. It’s their money, they should keep it.”
The Cardin/Enzi bill, the Medical FSA Improvement Act of 2013 (S. 966) has been endorsed by members of the Council for Affordable Health Coverage (CAHC) including the American Academy of Ophthalmology, American Osteopathic Association, Communicating for America, Healthcare Leadership Council, International Franchise Association, National Association for the Self-Employed, National Association of Health Underwriters, National Association of Manufacturers, National Retail Federation, Retail Industry Leaders Association, Small Business & Entrepreneurship Council. These groups note that the senators’ efforts would “strengthen the law’s original intent.”