SOURCE: American Association of Orthodontists

American Association of Orthodontists

February 27, 2015 18:08 ET

AAO-Backed Bill Would Increase Flexible Spending Cap to $5,000

Provide Families More Flexibility in Planning for Their Healthcare

ST. LOUIS, MO--(Marketwired - February 27, 2015) - A proposed new bill supported by the American Association of Orthodontists (AAO) would help families better meet the financial challenges of healthcare by adjusting restrictions on tax-free Flexible Spending Accounts (FSAs). The RAISE Health Benefits Act of 2015 will address spending caps on FSAs and the ability to rollover unused funds from one year to the next. The bill, sponsored by US Representatives Steve Stivers (R-OH) and Michelle Lujan Grisham (D-NM), also states that if the FSA holder has more than two dependents (as defined by the IRS), he/she may deposit up to an additional $500 for each dependent on top of the $5000 contribution.

FSAs are offered to approximately 33 million Americans through their employers1, and they are an efficient way to set aside funds to pay for healthcare services and items that are not covered by insurance, such as dental, orthodontics, doctor co-payments, prescription drugs, and medical supplies. All the funds accumulated in the accounts are tax-free.

"This proposed legislation is important to our patients since these types of accounts are an excellent means to help pay for orthodontic treatment, as well as other types of medical care," said Robert Varner, DMD, and president of the AAO. The AAO estimates that one in four families use FSA accounts now to help pay for treatment. The AAO was instrumental in keeping the FSA program intact when it was removed completely in an early version of the Affordable Care Act.

"Not all families are the same, it just makes sense that a family with four children should have a higher FSA limit than a single adult. Health care costs, such as braces, can be expensive," said Stivers. "My legislation would make it easier for families to address the financial challenges of paying for these types of health care costs."

Since the passage of the Affordable Care Act (ACA) in 2010 that established an annual cap of $2,500 per eligible employee, the AAO has led the process of drafting a bill to address healthcare coverage shortfalls. The RAISE Health Benefits Act of 2015 would lead to more effective spending on medical care by modifying two current restrictions.

The existing $2,500 cap is an arbitrary amount that significantly reduces a family's ability to pay for out-of-pocket expenses and impacts what medical services they choose to finance. Increasing the annual cap to $5,000 per qualified employee will help families save more for health expenses. In addition, the RAISE Act would allow families with more than two dependents to save $500 a year to their FSA for each additional dependent. This provides larger families with an increase in savings allotment that better reflects their medical care needs.

"The RAISE Act will provide much needed assistance to families faced with unusually large medical expenses," said Lujan Grisham. " Many patients with expensive conditions like cancer or hemophilia struggle to cover the costs of the treatments they need to live healthy, productive lives. This bill will ease the burden on those patients and their families by allowing them to save more to cover those costs."

The second concern addressed by the proposed legislation is the "use-it-or-lose-it" rule that, until recently, did not allow families to carry over balances in their FSAs from one year to the next. The "use-it-or-lose-it" rule made it impossible to save up for long-term medical needs that are predictable and affordable with a savings plan that extends past one calendar year. In 2013, an enhancement to the Patient Protection and Affordable Care Act was made by the Treasury Department that allows account holders to roll over up to $500 of unspent money into the following year. The RAISE Act takes the 2013 Treasury Department ruling to its natural conclusion, canceling the "use-it-or-lose-it" rule for all FSAs and allowing families to build balances over multiple years. "Much like 529 accounts or IRAs, FSAs will become a long-term asset for families and will help ensure that larger one-time medical costs do not wipe out the financial reserves of middle-class families," says Dr. Varner.

Now that the 2015 open enrollment season for companies offering healthcare benefits is over, and lawmakers are going back into session, the AAO and its members will be actively working to support this proposed legislation. The RAISE Health Benefits Act of 2015 will be the focus of the AAO's Professional Advocacy Conference, March 2-3 in Washington, D.C. During the Conference, the AAO will send all U.S. members an action alert including the FSA bill number, requesting that members post comments supporting it on their representatives' Facebook and Twitter pages, and/or to e-mail their representatives about the bill.

About the American Association of Orthodontists: Founded in 1900, the American Association of Orthodontists (AAO) is the world's oldest and largest dental specialty organization. It represents more than 17,000 orthodontist members throughout the United States, Canada and abroad. The Association encourages and sponsors key research to enable its members to provide the highest quality of care to patients, and is committed to educating the public about the need for, and benefits of, orthodontic treatment.

Orthodontists are uniquely qualified specialists who diagnose, prevent and treat dental and facial irregularities to correctly align teeth and jaws. After graduating from dental school and then completing the required two-to-three years of specialized education in an accredited orthodontic residency program, orthodontists are eligible for membership in the AAO.

For more information about orthodontics or to find AAO member orthodontists in your area, please visit

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