ACA ‘Cadillac tax’ could lead to elimination of FSAs

Flexible spending accounts, 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 ACA’s so-called Cadillac tax (Source: “'Cadillac tax' could wreck popular medical accounts,” Politico, Aug. 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.