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FSA Backers Map House Health Bill

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The Employers Council on Flexible Compensation says H.R. 3962, the Affordable Health Care for America Act bill, includes sections that could hurt flexible spending account and health savings account programs.

The ECFC, Washington, a group that represents the sponsors and providers of FSA, HSA and health reimbursement arrangement programs, earlier drew attention to sections in S. 1796, the Senate Finance Committee’s health bill, that would affect the programs.

H.R. 3962 contains some similar provisions.

S. 1796 would limit personal health account holders’ ability to use account funds to pay for non-prescription drugs. In H.R. 3962, Section 531 would let FSA, HRA and HSA holders use account funds to pay for medicines other than insulin only if the drugs were prescribed by health care providers.

Today, FSA, HRA and HSA holders can use account funds to pay for over-the-counter drugs such as aspirin without getting a prescription.

The ECFC has complained that S. 1796 would set the FSA contribution limit at $2,500 without indexing it for inflation. Section 532 of H.R. 3962 would cap tax-free contributions to FSAs at $2,500 per year, but it would index the cap for inflation.

Still another S. 1796 provision would increase the penalty for nonqualified HSA distributions to 20%, from 10%. The H.R. 3962 penalty-increase provision is in Section 533, the ECFC reports.