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Wenstrup Leads Bipartisan Bill to Provide Flexibility for Family Savings and FSAs

Washington, May 22, 2020 Contact: Chris Krepich (202-225-3164)

CINCINNATI, OH— Today, Representatives Brad Wenstrup (R-OH), Cindy Axne (D-IA), and Mike Kelly (R-PA) introduced the Family Savings Flexibility Act, which would temporarily adjust the rules for Flexible Spending Accounts (FSAs) and Dependent Care Flexible Spending Accounts (DCFSAs) to account for COVID-19 related cancellations and delays. The bill would also increase the contribution limits for Health Savings Accounts (HSAs) and DCFSAs.

 

“We should not penalize Americans who diligently saved their hard-earned money for healthcare and childcare. As we emerge from coronavirus shutdowns, we must provide flexibility to those who were unable to use their health FSA or DCFSA funds due to delays in procedures and services. Our bipartisan bill provides the necessary fix for these Americans, and I’m grateful to Representatives Axne and Kelly for helping lead this effort,” said Congressman Wenstrup.

 

“The uncertainty and burden of COVID-19 is impacting everyone’s budget – and it’s creating tough financial challenges for families,” said Congresswoman Axne. “I’m proud to lead this bipartisan effort to expand tax benefits for our working families in need during this economic downturn. It is more important than ever that we give Iowans tools to ensure their children are cared for and their health is protected, and I am glad this legislation will help Iowans hard-earned dollars go further.”

 

“Americans, now more than ever, need flexibility when it comes to their health care and child care services. The coronavirus pandemic has prevented Americans from using HSA and DCFSA savings for these purposes, so Congress must act to extend the time limit on spending these funds. By doing so, we can empower patients and parents during a time of unprecedented economic uncertainty,” said Congressman Kelly.

 

 

Background:

 

Individuals who sign up for FSAs and DCFSAs can divert some of their income into their accounts before taxes. However, there are limitations on what goods and services account holders can spend their money on as well as time limits for which the funds are available.

 

Per U.S. Department of Health and Human Services guidelines, many hospitals, doctors’ offices, childcare services, and other qualifying purchases were forced to temporarily close or limit services during the COVID-19 pandemic.

 

The Treasury Department announced certain changes in May to temporarily increase flexibility for these accounts, and The Family Savings Flexibility Act would build on those changes to:

    • Give employees the ability to roll over their health FSA and DCFSA dollars into the 2021 plan year.
    • Increase the contribution limit for HSAs to be tied to the annual limit on out-of-pocket and deductible expenses under an HSA-qualified plan.

Increase the DCFSA contribution limit from $5,000 to $10,000.