FSA Benefit Improvement Advances

The House has passed, as part of a larger tax bill (HR-4279), language to improve flexible spending account benefits for federal employees and other workers eligible for such accounts by allowing them to roll over up to $500 in unspent money at the end of each plan (calendar) year. Under current policy, FSA money is “use-or-lose,” meaning that any unspent money, after the claims for the period are all paid, reverts to the plan provider-in the federal government, FSAfeds, operated by SHPS, Inc., under contract to the Office of Personnel Management. FSAs allow employees to put in up to $5,000 a year pre-tax for certain dependent care expenses and up to $4,000 for certain health care costs not covered by insurance. Under the bill, which now goes to the Senate, FSA enrollees could roll over up to $500 either to the following year’s FSA account or to a “health savings account.” Those accounts have been authorized in the Federal Employees Health Benefits program for the 2005 plan year, although it’s unknown how many FEHB carriers will offer them.