Word is coming out of the Senate Finance Committee that consideration is being given to imposing an excise tax on health care benefits that exceed a specified threshold beginning in 2013. Although the threshold amount has not been finalized, reports suggest that the Committee may be considering $21,000 for family coverage. Reports also indicate that contributions to Health Savings Accounts (HSAs),  Flexible Spending Accounts (FSAs) and Health Reimbursement Arrangements (HRAs) would be included in determining whether the health benefits package exceeds the threshold. If employees receive benefits exceeding the overall threshold employers and/or insurers would pay a 35 percent excise tax on the amount in excess of the threshold.

In addition, reports indicate that the Senate Finance Committee is also considering imposing a $2,000 cap on contributions to FSAs beginning in 2013. This, coupled with a House plan to eliminate the use of HSAs and FSAs for over the counter drugs, is placing the burden of financing healthcare reform squarely on the shoulders of middle class workers.

Here are some fundamental problems with these ideas:

• FSAs, and more recently HSAs, have become important health care tools for both employers and their employees. They help Americans afford their out-of-pocket health care costs. Even under a reformed health care system, patients will still face out-of pocket expenses and we need these tools to help us afford these expenses.
• Placing additional caps on the contributions that may be made to these accounts will disproportionately harm patients with chronic illnesses who tend to face very high out of pocket costs.
• Further capping contributions to FSAs and HSAs is effectively a tax on health care and a tax on middle class Americans.
• Including FSAs and HSAs in the calculation of the excise tax threshold will cause employers to scale back or eliminate these plans (and potentially dental, vision, and other health benefits) to ensure they don’t exceed the overall cap on employee benefits and trigger the excise tax.
• Imposing an overall cap would be extremely complex and burdensome for employers. Employers would have to calculate the excise tax for each employee and their varying benefits and coverage levels and likely have to account for benefits provided to spouses and dependents under their employer’s plan.

Below is a list of Senate Finance Committee members and their contact information. If you value your FSA or HSA, this is the time to reach out to one or more of the committee members and let them know where you stand.