Note: None of this should be taken as legal or tax advice.
Reposted from ZaneBenefits, a valued partner and colleague.
In an effort to improve Flexible Spending Accounts (FSAs), Representative Charles Boustany has introduced a new bill to the U.S. House of Representatives called "The Medical FSA Improvement Act of 2011".
If passed, the bill, effective January 1, 2013, would amend the Internal Revenue Code to allow unused amounts contributed to flexible spending arrangements to be paid back to the participants as taxable income after the close of a plan year. Currently, such unspent amounts must be forfeited by the employee due to the "use-it-or-lose-it rule".
As we have discussed previously, effective January 1, 2013, health care reform will limit employee annual contributions to FSAs to $2,500.
Proponents argue that this change would increase FSA adoption by employers and employees. However, it does not solve the major disadvantage associated with the "uniform coverage provision".
What do you think?
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