Wall Street Journal Looks at End-of-Year ‘Scramble’ To Use Flexible Spending Account Funds
The Wall Street Journal today examines the increased number of individuals "scrambling" to physicians and massage therapists to use the funds that remain in their flexible spending accounts before the end of the year. The "use-it-or-lose-it nature" of the accounts, which allow employees to set aside pretax income to cover health care costs, has led to some "increasingly aggressive interpretations of how the money can be spent," the Journal reports. According to Internal Revenue Service rules, employees can use the accounts to cover the cost of services considered "medically necessary" by a physician -- which can include contraceptives, weight loss plans, smoking cessation programs, vasectomies, eyeglasses, dental care and massage therapy as a prescribed treatment for a medical condition. The IRS sets the rules for the accounts, but in practice employers or outside administrators must interpret the rules. Only about seven million U.S. residents participate in flexible spending account programs; employees often fear they will lose some of the funds that they set aside in the accounts, and individuals with "decent" health insurance have the "often wrong" perception that they do not need flexible spending accounts because they will not have many out-of-pocket costs. However, as the IRS becomes "more sympathetic to a wider array of claims," participation in the accounts may increase, the Journal reports (Lieber, Wall Street Journal, 11/5).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.