The "use-or-lose" rule often leaves FSA participants with an infuriating choice at the end of December or their grace period: wave goodbye to their hard-earned money or spend-down their account balances, potentially on items they wouldn't necessarily need.

The rule was originally put in place to prevent participants from using FSAs as tax shelters by stowing away the maximum amount allowed by an employer and cashing out at the end of the year. Now, a provision of the new health care law limits the maximum contribution to $2,500, rendering 'use-or-lose' redundant and unnecessary.  By simply allowing participants to roll-over unused funds for the next year, policy makers can help eliminate wasteful spending and ensure participants aren't penalized when their estimated expenses don't match up to their actual expenses at the end of the plan year. Changing the rule would allow FSA users to forget the stress of "spending down" their accounts during the holiday season or at the end of their grace period.

Advertisements encouraging participants to spend-down accounts (sometimes needlessly) to avoid losing their FSA benefits are plentiful. Since one major goal of health care reform was to eliminate wasteful spending, why not enact an easy fix?

2. Clarify the role of HRAs under the Affordable Care Act

It's unclear exactly how the new health care law will impact health reimbursement arrangements. Provisions in the new law prohibit group health plans and health insurance issuers from imposing annual or lifetime limits on essential health benefits and could end up leading to the prohibition of all stand-alone HRA plans.  For other employers, HRAs are an important financing tool enabling employees to purchase individual health coverage. Until more formal guidance is issued, the future of these types of HRAs remains up in the air. HRAs play an important part in the overall design of an employers' comprehensive benefits program and should be encouraged as the new health care law is implemented.

What lawmakers got right in the fiscal cliff budget deal

The "fiscal cliff" deal passed in early January included important steps to defend pretax accounts and preserve access to huge savings for millions of Americans.

1. Restoring parity to transit benefits

In 2012, transit account users saw their pretax benefits reduced from $230 to $125 per month, while the cap for parking costs was increased from $230 to $240 per month. The failure to restore parity between parking and public transit benefits effectively reduced the allowable contribution for mass transit commuters by $1,380 over the year. The new deal restored parity to the transit benefit with retroactivity for 2012, helping millions of Americans who rely on pretax commuter benefits to hold down the cost of using public transit to get to work.

Unfortunately, though, parity was restored only through 2013, which means we will end up in the same uncertain place at the end of the year. We need to extend, permanently, the same incentives for mass transit that we do for parking. It makes sense.

2. Extending the adoption assistance tax credit

The adoption assistance tax credit, which allows an employer to reimburse an employee on a tax-free basis for as much as $12,650 for expenses towards adoption, was scheduled to expire at the end of 2012. That's money that goes towards adoption fees, court costs, attorney fees and travel costs. Congress extended the credit permanently; a huge lift for families hoping to avoid paying extensive adoption costs without much help.  Congress is to be commended for making adoption assistance permanent, eliminating uncertainty for employers and those who are in the adoption process.

3. Extending the dependent care tax credit

The fiscal cliff deal also permanently extended and increased tax credits for child and dependent care, ensuring that caregivers will receive a credit of up to 35 percent of care-related expenses for up to $3,000 per dependent or $6,000 per family. Again, Congress should be congratulated for removing the uncertainty for individual taxpayers and those participating in a Dependent Care FSA, for whom the dependent care tax credit is an important factor in determining whether or not to participate in an FSA. While we're at it, though, dependent care FSA limits should be reviewed. They've been set at $5,000 for many years and the limit is not indexed. Anyone who has their kids in day care or needs elder care assistance knows that $5,000 is a woefully low number.  

It's important that the fight for pretax accounts continues, so they remain a reliable tool to control critical expenses for millions of Americans. Congress took some helpful steps earlier this month, but now it's time to make sure future policies protect these important benefits. 

To stay informed about these legislative priorities and get involved in advocating for their passage, I'd encourage you to check out www.SaveMyFlexPlan.org.