This is a letter from Joe Jackson, CEO of WageWorks, Inc. It does a great job of explaining the new laws and policies regarding your flexible spending funds.
Dear Partner,
Now that health care reform has passed, we wanted to let you know what the changes mean for you and your employees. While the final legislative package includes some future limits on flexible spending accounts (“FSAs”), the benefit remains an extremely valuable cost-saving vehicle. Not only do employers save on FICA and workers compensation expenditures, but health FSA amounts are completely tax free for your employees. They are a proven tool to help employees manage their out-of-pocket health expenses and often improve your employee’s health status by alleviating budgeting concerns frequently associated with maintaining treatment regimes for chronic conditions.
Specifically, there are two ways that the health care reform legislation will impact FSAs. First, and not until January 1, 2013, contributions to the benefit will be limited to $2,500 per year but this cap will annually adjust thereafter since it is indexed for inflation. And secondly, starting in 2011, participants will need a doctor’s directive in order to use their FSA to cover the costs of over-the-counter drugs.
At WageWorks, we played an active role in influencing the legislative process and formation of health reform. Our involvement included making the case for protecting FSAs directly in meetings with policy makers on Capitol Hill and in the White House and sponsoring the Save Flexible Spending Plans Web site (www.savemyflexplan.org), which served as a vehicle for supporters to send over 75,000 emails to their elected representatives. We will continue to lobby for improvements to the benefit and do our best to ensure that FSAs remain an effective budgeting tool for every working American.
FSAs enable employers and employees to achieve cost-savings through reduced expenditures and tax savings. Given this, we believe there’s no time like the present to raise awareness about FSAs in a concerted effort to increase participation. On a parallel track, we are also preparing to launch a broad consumer education campaign focused on reaching and influencing prospective participants.
We look forward to staying in touch with you and collaborating even more closely in the future.
Sincerely,
Joe Jackson
CEO
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