generic-drugs.jpgOn May 26 Senator Orrin Hatch of Utah and Representative Erik Paulsen of Minnesota, along with cosponsors, introduced a new bill to improve FSAs and HSAs.

The “Family and Retirement Health Investment Act,” bill number S. 1098 in the Senate and HR 2010 in the House of Representatives, would among other provisions allow employees to “carry-forward” up to $500 of unspent end-of-year FSA funds into the following year.

The $500 carry-forward, or “rollover,” would modify the present law “use it or lose it” rule that requires families to forfeit unspent FSA balances at the end of the year. It is widely believed that the forfeiture rule discourages employees from participating in FSA programs. Read more.

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New FSA/HSA Bill: The Family and Retirement Health Investment Act

Thu Jun 2, 2011

generic-drugs.jpgOn May 26 Senator Orrin Hatch of Utah and Representative Erik Paulsen of Minnesota, along with cosponsors, introduced a new bill to improve FSAs and HSAs.

The “Family and Retirement Health Investment Act,” bill number S. 1098 in the Senate and HR 2010 in the House of Representatives, would among other provisions allow employees to “carry-forward” up to $500 of unspent end-of-year FSA funds into the following year.

The $500 carry-forward, or “rollover,” would modify the present law “use it or lose it” rule that requires families to forfeit unspent FSA balances at the end of the year. It is widely believed that the forfeiture rule discourages employees from participating in FSA programs.

Another important provision in the new bill would repeal a section in last year’s healthcare reform law that took effect January 1, 2011 that prohibits the use of FSA, HSA or HRA funds to purchase over-the-counter medications without a prescription.

The new bill’s fate is uncertain. While there is much support for creating more flexibility for FSAs and HSAs, especially as out-of-pocket medical costs like deductibles and co-pays continue to soar, Congress and the White House are focused right now on federal budget deficits and the debate over raising the public debt ceiling.

Nevertheless, there is growing concern about the prescription requirement to use FSAs or HSAs for over-the-counter medicines. Physicians and retail druggists have been complaining to their senators and representatives about the extra burdens the new requirement has imposed on them for products like Advil and Claritin.

For families trying to save for out-of-pocket medical expenses in this challenging economy the Hatch-Paulsen “Family and Retirement Health Investment Act” is welcome news this Memorial Day weekend. They can only hope that Congress and the White House will agree to make it law by New Year’s Eve.