Congressmen Charles Boustany, R-La., and John Larson, D-Conn., introduced the Medical Flexible Spending Account Improvement Act, which would allow consumers to withdraw and pay taxes on any residual funds in their flexible spending accounts, rather than requiring them to surrender the balance to their employer, as outlined by current rules.
Save Flexible Spending Plans, an advocacy campaign that promotes FSAs, commended the bill's sponsors for focusing on 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," says 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."
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Boustany and Larson agree and expressed this in a letter to Congress: "Over 85 percent of large employers offer FSAs but only 20-22 percent of eligible employees enroll. The principal reason for not enrolling or for underfunding accounts is fear of the 'use-or-lose' provision."
The bill's sponsors also note one-quarter of participants annually forfeit a portion of their FSA funds.
"In considering changes to improve our health care system, removing 'use it or lose it' is an easy fix, 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," Jackson says
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