NEWS ADVISORY
November 30, 2004
PR-04/47
For additional information:
Deanna Johnson Keim, APR
202-289-6700
We'd rather use it than lose it
Council urges Treasury Department to change flexible spending arrangement (FSA) rule
| WHO:
| Paul Dennett, vice president, health policy, American Benefits Council
Maria Ghazal, director, health policy, American Benefits Council
Susan Relland, health care legal counsel, American Benefits Council |
| WHAT:
| The Chairmen of the Senate Finance Committee, Charles Grassley (R-IA), and the House Ways and Means Committee, Bill Thomas (R-CA), recently requested that that U.S. Department of Treasury use its authority to modify the "use it or lose it" rule that applies to health flexible spending arrangements (FSAs). This rule, which has long been applied, though it formally exists only in proposed form, requires that all funds in an FSA account be spent in the year in which they are contributed or the participant loses the remaining balance at the end of that year. The "use it or lose it" rule deters many workers from participating in these tax-advantaged vehicles because they fear losing their money if not fully spent. The rule also encourages those who do participate to spend their remaining account dollars at the end of each year regardless of whether a health care service is needed.
Since the FSA "use it or lose it" rule was created by proposed regulations that were never finalized, the Treasury Department may change the rule without legislative direction from Congress. The American Benefits Council is urging the Treasury Department’s Internal Revenue Service (IRS) to propose and finalize a new rule that would permit a limited dollar amount to be carried forward in an FSA account each year.
Council staff are available to discuss this issue and its importance for millions of American workers and their employers. In addition, the following background material urging the modification of the "use it or lose it" rule may be of use to reporters:
|
| WHERE:
| Interviews may be conducted via phone, e-mail or in person at the Council offices at 1212 New York Avenue, NW, Suite 1250, Washington DC. |
| WHEN:
| Any time following receipt of this advisory. Council office hours are 8:00 a.m. to 6:00 p.m. ET, Monday through Friday. |
| CONTACT:
| To arrange an interview with a Council staff member, please contact Deanna Johnson Keim, APR, at djkeim@abcstaff.org or via phone at 202-289-6700.
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The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council’s members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.
http://www.americanbenefitscouncil.org/issues/health/consumer.cfm
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