ACA ‘Cadillac Tax’ Could Lead to Elimination of FSAs

Source: Health Policy Institute of Ohio

Flexible spending accounts (FSAs), which allow people to save their own money tax free for everything from doctor co-pays to eyeglasses, may vanish in coming years as companies scramble to avoid the Affordable Care Act’s so-called Cadillac tax (Source: “’Cadillac Tax’ Could Wreck Popular Medical Accounts,” Politico, August 31, 2015).

FSAs will “be one of the first things to go,” said Rich Stover, a health care actuary and principal at Buck Consultants, an employee benefits consulting firm. “It’s a death knell for them. If the Cadillac tax doesn’t change, FSAs will go away very quickly.”

According to a study by the Kaiser Family Foundation that was released last week, a quarter of employers will have at least one plan that could be subject to steep taxes in 2018, and barring changed policies that share will increase with time.

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