New Congress pressed to lift restrictions on flexible spending accounts

An employer-backed group is pressing the new leaders in Congress to alleviate restrictions placed on flexible spending accounts by the health reform law.

The law limits contributions to FSAs and imposes restrictions on how they can be used to help pay for health reform. Liberals argue FSAs, which are designed to allow employees to pay out-of-pocket healthcare costs with pre-tax dollars, encourage the overuse of healthcare because they can be spent on many healthcare services or items regardless of their value or effectiveness.

"It was never a good idea to fund health reform on the backs of hard-working Americans who use flexible spending accounts to manage and contain health costs," Joe Jackson, chairman of Save Flexible Spending Plans, said in a statement. 

Jackson's group wants Congress to: 

• repeal — or at least delay — a new requirement that forces participants starting Jan. 1, 2011, to get a doctor's prescription before they can buy over-the-counter medications. Jackson called the provision "an utter waste of consumers' and physicians' limited time" that will only increase healthcare costs;

• increase the new $2,500 annual contribution limit that starts Jan. 1, 2013, to $5,000; and

• allow participants to roll over $500 or cash out unused funds at the end of the year. Even before health reform FSAs provided a "use it or lose it" benefit but Jackson says the new law's contribution cap makes the forfeiture rule unnecessary.