U.S. Senators Ben Cardin, D-Md. and Mike Enzi, R-Wyo., both members of the Senate Finance Committee, have introduced legislation that keeps a worker's unspent funds from a flexible spending account in their own pocket. The Medical FSA Improvement Act of 2013 (S. 966) would amend the Internal Revenue Code to allow employees who use health flexible spending arrangements (FSAs) to cash out any remaining balance in their account at the end of a plan year. This provision replaces current Internal Revenue Service policy in which any unspent FSA funds revert to the employer at the end of the plan year for activities related to the administration of the plan.
"In an economy where every penny counts, it makes little sense 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 put their money into FSAs to help defray their out-of-pocket health care costs, saving money for them and their families. We should remove any fear these workers have of losing their hard-earned money while encouraging them to use these funds wisely."
"Medical flexible spending accounts help put families and consumers in control of their medical decisions," said Senator Enzi. "With the high cost of health care, we should be doing whatever we can to encourage people to be proactive and plan ahead, like putting money into a FSA for out-of-pocket costs. Our legislation will ensure that hard-working Americans don't lose the money they put aside simply because their health costs were less than they anticipated. It's time to end use-it-or-lose it for 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. Many families count on their FSAs to help pay for their monthly expenditures for prescription drugs, co-pays for doctor visits, their children's dental care, and medical equipment and supplies for disabled family members.