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|ECFC Issue: Tax Advantaged Accounts|
Tax Advantaged Accounts
A majority of employers currently sponsor consumer driven health plans for their employees. ECFC member companies assist in the administration of such accounts for over 35 million employees. Approximately 103.5 million Americans benefit from these tax advantaged accounts, which include Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs) and Health Reimbursement Arrangements (HRAs).
More and more employers are moving toward higher-deductible health plans or plans that increase the amount of cost sharing borne by employees. In addition, employers are taking action to reduce the costs of their health coverage, yet protect employees from higher out of pocket costs by moving to account-based, consumer-directed arrangements. Consequently, tax advantaged accounts, such as FSAs, HRAs and HSAs, are of increasing importance to American workers and their families.
These tools provide a means of budgeting for increased out-of-pocket health care costs and help many Americans pay for critical health care procedures that otherwise they may forego. According to a 2014 survey conducted by Visa, Inc., 43 percent of the responders said they would probably/definitely cut back on medicines and treatments if they didn’t have an FSA. The type of treatments they would cut back on, in order of most to least, includes: doctor visits, vision, dental, over-the-counter (OTC) medicines, prescriptions, and sick doctor visits.
It is clear that the excise tax will have an adverse impact on millions of American businesses and consumers. Although the tax has been delayed another two years, the marketplace is reacting now in anticipation of the tax and preparing for 2022. Action must be taken now to counteract the unintended consequence of this provision. Consumer directed arrangements such as FSAs, and HSAs help keep healthcare costs down and allow middle class families to save for and manage their health care bills. The tax should be repealed given its impact on consumers, employers and all consumer directed arrangements.