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Bill Would Repeal FSA Cap Provision in Health Care Reform Law

February 14, 2011
Related Topics: Finance/Taxes, Compensation Design and Communication, Benefit Design and Communication, Health Savings Account (HSA), Health Care Costs, Health Care Benefits, Latest News

Legislation introduced in the Senate would repeal provisions in the health care reform law that cap how much money employees will be able to contribute to flexible spending accounts and sharply restrict their use and those of health savings accounts to pay for over-the-counter medications.

The measure, introduced Feb. 10 by Sen. Kay Bailey Hutchison, R-Texas, would remove the provision, which, effective in 2013, places a $2,500 ceiling on FSA contributions.

Under current law, there is no limit, though employers typically cap employee contributions at between $4,000 and $5,000.

Hutchison’s bill, which has seven co-sponsors, all Republicans, also would remove a health care reform law provision that bars employees from using their FSAs and health savings accounts to pay for over-the-counter medications, except for insulin, without a doctor’s prescription. That provision took effect on Jan. 1.

These new restrictions “stifle patients’ flexibility and freedom to use health benefit accounts that have helped make care more affordable for tens of million of Americans,” Hutchison said in a written statement.

“Our bill strikes these arbitrary limitations and puts patients back in charge of how and when they’ll use HSA and FSA benefits,” she said.    

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail


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