Oct 31 2013
Decision to Allow $500 in FSA Savings to Roll Over to Following Year Mirrors Key Provision of Hatch Legislation
Today, U.S. Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee, said he’s pleased that the Treasury Department and Internal Revenue Service (IRS) have changed the so called “use-or-lose” rule for Flexible Spending Arrangements (FSAs) so that a $500 portion can now be rolled over to the following year. Hatch, who has introduced legislation allowing $500 to roll over for FSAs and Health Savings Accounts (HSAs) as well, believes FSAs and HSAs should be expanded since they are critical tools to help millions of Americans save and help pay for out-of-pocket health care costs.
“This was a good decision by the Treasury Department. Allowing Americans who have one of these accounts to roll $500 over to the following year just makes sense and will give people more help to pay for out-of-pocket health care costs,” said Hatch. “I’d like to see more done to expand these critical accounts that empower the individual to make informed health care decisions using money they saved.”
Under the Affordable Care Act, FSA contributions were reduced from $5,000 to $2,500. The law also created new limitations on HSAs and FSAs that prevent consumers from using those savings to purchase over the counter treatments like aspirin and cold medicine without a prescription.
Hatch’s legislation, the Family and Retirement Health Investment Act, will streamline and simplify HSAs and FSAs for American families, seniors, and entrepreneurs.
Specifically, the legislation will:
- allow a husband and wife to make catch-up contributions to the same HSA;
- remove the onerous new restrictions on the use of HSA and FSA dollars for the purchase of over-the-counter drugs;
- allow individuals to roll-over up to $500 from their FSA accounts;
- clarify the use of prescription drugs as preventive care that will not be subject to an HSA-eligible plan deductible;
- reauthorize the use of Medicaid health opportunity accounts;
- promote wellness by expanding the definition of qualified medical expenses to encourage more exercise and better diet;
- allow seniors enrolled in Medicare Part A to continue contributing to their HSAs; and
- allow for the purchase of low-premium health insurance and long-term care insurance with HSA dollars.