Now there’s a Senate version of a proposal to end the “use-it-or-lose-it” rule on employees’ flexible spending accounts.
You’ll remember the Medical Flexible Spending Account Improvement Act (H.R. 1004) that was introduced in the House of Representatives last March.
Now a bill by the same name (S. 1404) has been introduced in the upper chamber of Congress by Sen. Ben Cardin (D-MD) and Sen. Mike Enzi (R-WY).
Both bills call for the repeal of the rule that requires employees to forfeit to their employers any leftover balance in a medical flexible spending account at the end of the plan year.
In a press release, the senators said the IRS adopted the provision to prevent FSAs from being misused as tax shelters.
But, according to Sen. Cardin, “with the enactment of the Patient Protection and Affordable Care Act in 2010, annual contributions to FSAs will be capped at $2,500 beginning in 2013, which makes the rule unnecessary.”
We’ll keep you posted. For a look at the bill, go here.
