Sen. Chuck Grassley Calls for End of Requirement To Return Unused Flexible Spending Account Funds
Senate Finance Committee Chair Chuck Grassley (R-Iowa) on Monday sent a letter to Treasury Secretary John Snow calling on the department to change a rule that requires employees at the end of the year to return to their employers any unused funds in their flexible spending accounts, the AP/Las Vegas Sun reports. FSAs allow employees to set aside a specified amount of their salary for medical costs not covered under their health benefits. That amount is then subtracted from the employees' taxable income.
However, under current rules, employees at the end of the year are required to return to their employers any unused funds in their FSAs, a provision "that has made the accounts unpopular," according to the AP/Sun. Grassley wrote, "The current rule unjustly enriches employers at the expense of hard-working employees who participate in FSAs." He added, "Modifying this rule would help millions of Americans meet their health care expenses and make the FSA rules more rational."
Grassley asked Snow to determine whether the Treasury Department can rewrite the so-called "use-it-or-lose-it" law on its own. He noted that several legislative proposals to eliminate the provision have been introduced in Congress (AP/Las Vegas Sun, 8/23).