According to Crain Communications’ BusinessInsurance.com article on August 24, 2011, “a grass-roots drive is under way to convince lawmakers to repeal a health care reform law provision that will cap how much employees can contribute each year to their flexible spending accounts, but even backers say the chances of a successful repeal are slim.”

Before the Patient Protection and Affordable Care Act, there was no federal limit on employees’ annual FSA contributions. Employers, though, typically limit employee contributions to $4,000 or $5,000 a year.

But starting in 2013, contributions that employees can now make to their FSAs under the PPACA will be limited to $2,500. After that, the annual limit will rise directly with increases to the Consumer Price Index.

This change was primarily revenue-driven so that lawmakers could help fund the provision for federal health insurance premium subsidies to uninsured lower-income individuals. By limiting these contributions they were able to raise roughly $13 billion in federal revenue from 2013 through 2019, according to the congressional Joint Committee on Taxation.

According to Amy Bergner, a partner with Mercer LLC, “Any attempt to repeal a provision that costs revenue is far from a slam dunk.”

Gretchen Young, Senior Vice President of Health Policy with the ERISA Industry Committee in Washington, agrees,  “In this era of fiscal restraint, a repeal of the FSA cap would clearly be an uphill battle.”

Stay tuned.

Flexible spending accounts (FSAs) have been part of many employer-sponsored health plans for the past two (2) decades, used by both large and small companies to decrease health care costs for their employees. But a major change to the federal health care law this year stopped consumers from using FSA dollars to cover over-the-counter medicine without a doctor’s prescription.

Now bills floating through Congress would lift some restrictions on flexible spending accounts and allow employees to once again set aside pre-tax earnings to pay for out-of-pocket health care expenses. Minnesota Congressman and Republican Erik Paulsen introduced a bill back in February that would allow consumers to use flex accounts for non-prescription medicines as well as remove the $2,500 contribution limit on consumers.

Although this is good news for the millions who have flexible spending accounts, don’t start celebrating yet. Before any changes can be made, according to Representative Paulsen, Congress would have to find the money somewhere else in the budget (about $18 billion), and the bills’ authors have yet to identify where that money will come from.

Did you know that 30 million Americans who have paid into their FSAs end up leaving about $450 million of tax-free money unclaimed by the time the deadline rolls around. That’s what Jeremy Miller says, founder and president of FSAStore.com, a one-stop shopping site for FSA-friendly products and services. Remember, when it comes to flexible spending accounts (FSAs), you use it or lose it.

And where does all that unspent money go? Not in your wallet, but back to the people who really don’t need it…your employers.

So how do you minimize your losses and maximize your flexible spending account?

1. Find out what’s covered.
   Ok, so you may need a prescription for over-the-counter drugs now but there are plenty of other things for which you can get reimbursed. According to Miller, “There are 24,000 products that fit the FSA requirements, from first aid to family planning, and FSAStore sells 4,000 of those products.” Allocating less than last year because of the prescription drug change is a mistake.
2. Know Your Deadline.
   A large majority companies require that you deplete your FSA account by the end of the year although there are some companies that provide you with another 3 month grace period. That means you have until March to take care of yourself and your family with 2010 dollars. Make sure you know what your company does.
3. Turnaround the paperwork ASAP.
   Even if your company provides you with a 3 month extension, the date to file your reimbursement requests may be sooner. Don’t wait! Take a look at your annual receipts. Co-pays or other relevant medical fees are eligible for reimbursement. Get them in…now!
4. Check, double-check, and (okay) triple-check.
   Know your balance and the deductions against it. Treat it like a checking account that you want to get to a zero balance.

Follow these four easy steps, and you won’t be giving your hard-earned money back to your employer.