Legislation under consideration by the U.S. Senate’s finance committee that would place restrictions on flexible-spending accounts is ill-advised.
As Greg Bordonaro points out in today’s Financial Sense column, the proposal is part of the larger health care reform efforts on Capitol Hill — and one which would have the unintended consequence of hurting business owners like Robert Patricelli.
Patricelli is chairman and CEO of Avon-based Evolution Benefits. His company, which has been in business since 2002, offers prepaid benefits cards for people to use with their flexible-spending accounts, health-savings accounts, and health-reimbursement arrangements.
Patricelli’s company has been growing ever since its inception and has been recognized nationally for its innovative product, which allows customers to simply swipe a credit card that automatically deducts funds from their benefits account.
Patricelli is worried his business could be hurt by the proposed legislation, which would impose a new $2,500 cap on FSA contributions and subject the accounts to an excise tax by lumping the benefit together with high-cost insurance plans.
The legislation would also limit the use of FSAs for over-the-counter medications by forcing participants to get a prescription for everyday items such as allergy medicine.
The changes could cause many employers to reconsider offering FSAs altogether.
Connecticut’s Congressional delegation should consider those concerns and work toward defeated the $2,500 cap and excise tax.
