Sen. Hutchison: Newly Effective Limitations on HSAs and FSAs Take Away Patients' Flexibility, Choice, and Cost Savings

Statement

Senator Kay Bailey Hutchison (R-Texas) continued to voice her opposition to the new health care law's restrictions on health savings accounts (HSAs) and flexible spending accounts (FSAs) that went into effect on January 1, 2011. Sen. Hutchison, who has introduced legislation to repeal these limitations on HSAs and FSAs, vowed to continue to fight to restore patients' access to choose health care plans that suit their individual and family needs.

"Despite the popularity of HSAs and FSAs, the health care law places significant limitations on these plans. As of January 1, the health law now prohibits individuals from using either HSA or FSA funds to purchase over-the-counter medication unless they have a prescription from their doctor. This will deny patients the freedom to use their benefits for non-prescription purchases without the added costs of unnecessary visits to their physicians' offices," Sen. Hutchison said.

The new health care law will also limit patients' cost savings by placing an arbitrary cap of $2,500 on flexible spending accounts. Prior to enactment of the health care bill, there was no federal cap that an employer had to comply with in order to offer FSA benefits to employees. Sen. Hutchison introduced the Patients Freedom to Choose Act during the 111th Congress, and she will work to push the legislation forward in new session.

"By placing limitations on HSAs and FSAs, the health reform law undermines the fundamental benefits of flexibility, choice, and cost savings. My legislation would repeal the $2,500 limit on FSAs, and would allow over-the-counter drugs to be purchased through these accounts," Sen. Hutchison said.

HSAs and FSAs are innovative and popular health benefits that both large and small employers offer to their employees. These accounts allow individuals to set aside a certain amount of money each year on a pre-tax basis in order to pay for various healthcare expenses. Because employee contributions are made before they are taxed, these accounts are another way to ease Americans' growing tax burden. America's Health Insurance Plans recently released a report that shows over 10 million Americans now are enrolled in HSAs. In addition, over 35 million people have FSAs and 85 percent of all large employers (those with over 500 employees) offer them as a benefit to their employees.

Senator Hutchison's legislation has received wide support from the business community.

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