What happens to Flexible Spending Accounts?
Employers that offer flexible spending accounts (FSA’s) and employees who utilize them will face new contribution limits. Employers that have utilized FSA’s to promote consumer-driven health care as a means of controlling rising health care costs will face caps on the salary amount that can be directed to FSA’s. Beginning in 2013, salary reductions for FSA’s will be limited to $2,500. This amount will be indexed for inflation. However, if health costs continue to rise at a higher rate than inflation, the effective value of FSA’s may diminish over time. 10. Will the PPACA and Reconciliation Act reduce health care costs? Answer: The ultimate question for employers is whether or not health care legislation will, in fact, bend the cost-curve or, in other words, reduce employers’ ever-increasing health care costs. For employers grappling with the impact of rising health care costs in the competitive global economy, the answer is far from certain. The CBO opined that the PPACA “could have br
