The Responsible Additions and Increases to Sustain Employee (RAISE) Health Benefits Act of 2015 (H.R. 1185), is the brainchild of the American Association of Orthodontists Government Affairs Committee and allows for better opportunities for all American families to responsibly save for health expenses.
This legislation is a true health consumer benefit. It will now allow for entire orthodontic treatments to be paid with FSA funds and allow siblings to be treated during the same time frame. Parents can make intelligent financial planning decisions regarding orthodontics as well as other non-emergency health care. Most importantly, families can avoid wasting year-end unused funds. – Dr. Dennis Hiller
Dr. Hiller recently co-sponsored a reception for U.S. Senator Kelly Ayotte of New Hampshire to show his support for and further promote the RAISE Act in the community.
I love this legislation as it allows for families to responsibly recognize and save for health expenses longer than one year. Parents, like Sen. Ayotte, are very pleased to hear of this practical and common sense legislation. – Dr. Dennis Hiller
See the details on the the RAISE Act below:
Source: American Association of Orthodontists: 2016 AAO Legislative Priorities
Flexible Spending Accounts (FSAs) allow employees who opt into their employer’s program to set aside pretax dollars to pay for valuable health care services and items that are not covered by insurance — including vision and dental services, doctor copayments, prescription drugs, and medical supplies.
While FSAs are already a useful resource for 35 million families nationwide, recent changes limit the benefit’s value and keep millions of consumers from using an FSA at all. FSAs are offered by 85 percent of employers, with nearly 35 million individuals who enroll.
Prior to the Affordable Care Act (ACA), the law allowed employers to offer families limitless savings through FSAs, but they were subject to a “use-it-or-lose-it” rule where unused funds at the end of the calendar year were surrendered to the employer. The ACA put an annual cap of $2,500 on FSAs and the Department of the Treasury made other modifications. In 2013, Internal Revenue Service (IRS) regulations relaxed the “use-it-or-lose-it” rule, enabling employers to permit employees to roll over up to $500 in unused funds to the next calendar year.
Three Challenges Limit Consumer Benefits From FSAs
Three challenges stand in the way of many families maximizing the value of FSAs:
- The current $2,500 cap is an artificial limit and too low compared to expected health care needs of most families and consumers. The current cap does not accurately reflect the substantial health care costs a family may face on an annual basis. The typical family of four with an average employer-sponsored health plan spent about $4,000 in out-of-pocket costs in 2015.
- The current structure penalizes larger families by failing to take into account their increased health costs for additional dependents. The current cap unfairly provides larger families less savings per person than smaller families. The current cap does not take into account the diversity of family size.
- The limited carryover prevents families from building meaningful savings to pay for predictable and larger, more critical health care needs. Families may underfund accounts at the start of the year to avoid possible forfeiture later. Families with lower incomes may not utilize FSAs due to tight budgets and fear of forfeiture, despite the benefit of pre-tax dollars. The carryover limitations encourage wasteful spending at the end of the year instead of incentivizing savings that can accumulate until needed by a family.
The RAISE Act Improves FSAs for Every Family and Consumer
Parents can assess their families’ needs and utilize their resources accordingly. Moreover, it is their money and they should not lose it in December or at anytime. – Dr. Dennis Hiller
- The current $2,500 cap is expanded to $5,000. Families can use the accounts to fund more expensive health care services and treatments as needed.
- The $5,000 cap allows an additional annual $500 per employee dependent after the first two dependents. This allows families larger than the traditional family of four to better plan for their needs. Proportional funding allows families to assess their personalized and unique expense needs and utilize funds accordingly.
- The current grace period is extended to allow employees to carry forward any unused funds in perpetuity. Families and consumers can use FSAs to build reserves that will help them handle major medical expenses in the future. Families can responsibly and efficiently budget savings according to medical need each year. Families can avoid forfeiting or wasting funds. Families with lower incomes can budget effectively to avoid wasting valuable income.