Senators Propose FSA Carry Forward

February 11, 2005 ( - A bipartisan US Senate group has proposed allowing workers to carry forward up to $500 in unused Flexible Spending Account (FSA) funds to the next year or move the money to a Health Savings Account (HSA).

Senator Jim DeMint (R-South Carolina) sponsored The Flexible Spending Account Enhancement Act of 2005 (S 309) with Senators Ken Salazar (D-Colorado)and John Ensign (R- Nevada ), according to a statement on DeMint’s Web site.

FSAs are tax-free employer-sponsored benefit plans that reimburse employees for qualified health care expenses.

Nearly 37 million private-sector employees have access to FSAs, however, less than seven million take advantage of them, according to DeMint.  However, approximately 76% of FSA participants will take advantage of the rollover option each year, according to the Joint Committee on Taxation.

“FSAs are already very helpful tools, but we can make them even better,” DeMint said in the statement. “These accounts allow people to save for unforeseen medical expenses, yet they lose all of the unspent money they saved at the end of the year. This “use-it-or-lose-it” rule ends up penalizing workers and it just doesn’t make sense.”

“Giving employees the ability to rollover funds to the next year will encourage more people to participate in FSAs because they can better manage their hard-earned money,” said Salazar, in the statement. “We have to start allowing Americans to better save for their own health care and give individuals more control over their health care decisions.”

DeMint said he had introduced the bill in the House where it was approved in May 2004, but later died in the Senate.