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Lawmakers press for federal FSA carry-over

Senate Democrats are pressing the Office of Personnel Management to allow federal workers to carry over a portion of their health savings accounts into the next year.

Roughly 322,700 federal employees are enrolled in the flexible spending accounts, or FSAs, which allow workers to set aside up to $2,500 of their income tax-free for health expenses each year.

Until recently, workers were required to use all of the money in the account within the year or lose it.

But in October, the Internal Revenue Service modified the program to allow workers to carry over $500 of their FSA balance into the new year. While some private companies have taken advantage of that change, the federal government has not decided whether to do so.

"It is unreasonable to expect health FSA participants to accurately forecast their out-of-pocket medical expenses a year in advance," the senators wrote in a letter to OPM Director Katherine Archuleta. "And it is unfair to penalize them at the end of the plan year should their estimates prove to be inaccurate."

In 2012, the senators wrote, nearly 31,000 federal workers forfeited an average of $392 each in contributions because of the "use-or-lose" rule.

The signatories — 55 Democrats and independents — urged the Office of Personnel Management to adopt the change "without delay."

The letter was organized by Sen. Ben Cardin, a Maryland Democrat.

Asked about the request, an OPM spokeswoman said the agency would respond to it "after it has been thoroughly reviewed."

The U.S. Treasury Department estimates that 14 million families are enrolled in health FSAs nationwide. The use-or-lose rule has been in place for nearly 30 years.

john.fritze@baltsun.com

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