Half of Largest U.S. Employers To Allow Extra Time To Use Flexible Spending Accounts, Survey Finds

Only about half of the nation's 318 largest employers plan to let employees extend by two-and-a-half months the time they have to use funds in their flexible spending accounts, according to a survey conducted by Deloitte Center for Health Solutions, the AP/Las Vegas Sun reports.

The accounts, which are used by about 20% to 30% of eligible workers, allow employees to divert a specified quantity from each paycheck, tax free, to an account that can be used for out-of-pocket medical and child care expenses that year. Unspent funds are returned to the employer. The Internal Revenue Service relaxed its "use-it-or-lose-it" rule after employers said that too many workers do not use FSAs because they lose unspent money in the account at the end of the year.

"I'm not surprised [about the survey's results]. It's another layer of complexity, which makes it difficult for the employers to administer and the employees to understand," Martha Priddy Patterson, a director at DCHS, said.

Lawmakers have lobbied to eliminate the deadline entirely, but Treasury Department Secretary John Snow said that doing so would result in fewer health savings accounts being established, which the Bush administration believes are an effective way to contain health care spending (Freking, AP/Las Vegas Sun, 8/10).