The biggest criticism of FSAs is the 'use it or lose it' provision that can force consumers to lose their hard-earned money if they inaccurately predict what their medical expenses are going to be for a given year. This burdensome rule is one big reason why people are turning their backs on the benefit, and why employers are seeing such low enrollment. It's also a top driver towards any end-of-year unnecessary health care spending that occurs.

Fortunately, the idea of eliminating this rule is being led by Sens. Ben Cardin (D-Md) and Mike Enzi (R-Wyo), as well as Reps. Charles Boustany (R-La.) and John Larson (D-Conn).  They have introduced the Medical Flexible Spending Account Improvement Act (S.1404 and H.R. 1004), which would get rid of the faulty provision and allow users to pay taxes and withdraw any leftover funds from their FSAs.

"It is time to modernize FSAs to eliminate this burdensome 'use it or lose it' rule. It is both fair and sound health policy to allow FSA participants to cash-out remaining funds at the end of the year rather than forfeiting the balance to their employer," said Sen. Cardin during his introduction of the bill.

Unfortunately, there has not been much movement on the pending legislation.  Clearly, more attention and pressure is needed on Congress to get this fix on track for passage.

OTC requirement needs to go

This past year we have had to comply with the OTC prescription requirement that was brought on by the 2010 health care reform law.

This change is causing consumers to either waste their time and money meeting with their doctor every time they need an OTC medication, or pressuring them to spend non-reimbursable expenses to avoid the trip all together.  It's adding costs to our health care systems, burdening doctors and diminishing the appeal of FSAs for consumers. 

Currently, there's not a leading legislative vehicle to get this changed, but it is in a number of bills that have been introduced.  However, it needs to happen.  Simply put: When a new policy doesn't work, fix it.

Re-establishing transit parity

Sadly, after an extension wasn't granted before its Dec. 31, 2011 deadline, public transit users who once were able to set aside $230 in a commuter account can now only set aside up to $125 per month. This clearly left public transit users with the short end of the stick, as people who use commuter accounts to cover parking expenses can now put aside $240 a month – a slight increase from last year.

Fortunately, this change has not gone unnoticed and supporters of bringing back parity for those with commuter accounts are making headway.  Leading members of Congress and groups like CommuterBenefitsWorkForUs.com have helped to generate significant media attention around the devastating impact of this change on many public transit users.

As a fix, Senator Charles Schumer and Representative James McGovern have introduced legislation, the Commuter Benefits Equity Act of 2011 (S. 1034 and HR 2412), that would permanently restore parity between the transit and parking portions of the commuter benefit.

"In this economy, it makes no sense to sock hard-working mass transit commuters with a new tax increase," said Senator Schumer, the senior senator from the State of New York. "Congress must step up to the plate and extend the full mass transit tax benefit as part of the payroll tax cut. It's simply not fair to squeeze middle class mass transit commuters with a more expensive commute."

New tax and transportation legislation, which Congress is expected to move on in early 2012, will hopefully be the legislative vehicle we need in order to restore the transit portion of the commuter benefit program.

Take a stand

If you're interested in getting involved in helping advance these legislative priorities or would like more information, I invite you to check out the following links:

Save My Flex Plan www.savemyflexplan.org

A national grassroots advocacy campaign to protect the accessibility and use of flexible spending accounts (FSAs).

Commuter Benefits Work for Us www.commuterbenefitsworkforus.org

Learn more about commuter benefits and what you can do to help bring back transit parity.