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The Wagner Law Group Description 

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 


Established in 1996, The Wagner Law Group has 19 attorneys engaged exclusively in employee benefits, estate planning and employment law. Five of our attorneys are AV rated by Martindale-Hubbell as having very high to preeminent legal abilities and ethical standards. The firm is among the largest ERISA boutiques in the country. Our practice is national in scope, with clients in more than 40 states and several foreign countries.






Contact Info

The Wagner Law Group


Massachusetts Office 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110

Florida Office 

Tel: (561) 293-3590
Fax: (561) 293-3591
7121 Fairway Drive
Suite 203
Palm Beach Gardens, FL 33418


New York Office

Tel: (716) 650-5987

Fax: (716) 633-0301

333 International Drive

Suite B-4

Williamsville, NY 14221


San Francisco Office

Tel: (415) 625-0002

Fax: (415) 829-4385

315 Montgomery Street

Suite 902

San Francisco, CA 94104




June 21, 2012 

 State and Federal Law Alert







 House Passes Bill That Would Limit the

Use-it-or-Lose-it Rule for Health FSAs




The U.S. House of Representatives recently approved a bill that would limit the health flexible spending accounts ("health FSAs") "use-it-or-lose-it" rule, which currently requires participants to forfeit any unused balances at the end of the plan year (or after the 2 month grace period).   The legislation, H.R. 436, combines five originally separate bills that were each approved by the House Ways and Means Committee. 


If enacted, the House's version of H.R. 436-the Health Care Cost Reduction Act-would:


         revise the health FSA "use-it-or-lose-it" rule by amending the Internal Revenue Code to allow up to $500 of unused balances in health FSAs to be returned to a participant as taxable income after the plan year ends;

         repeal the Patient Protection and Affordable Care Act ("PPACA") provision prohibiting health FSAs and health savings accounts ("HSAs") from reimbursing over-the-counter medication purchases;

         repeal the PPACA provision that imposes a 2.3% excise tax on medical devices beginning January 2013;

         modify the tax rules applicable to HSAs to:

-          allow former employees to use HSA contributions for health insurance expenses;

-          allow spouses to allocate their catch-up contributions between their HSAs;

-          permit certain deductible HSA contributions to be eligible for a saver's tax credit;

-          permit individuals who recently received veterans' benefits for a service-connected disability to make HSA contributions;

-          allow HSA contributions to pay for certain expenses incurred before the establishment of the account; and

         eliminate PPACA limits on the amount of excess health insurance tax credit payments that can be "clawed back" from low- and middle-income taxpayers who receive advance payments larger that the premium assistance credits to which they are entitled. 


H.R. 436 now heads to the Senate, where several Democratic senators have previously sponsored or cosponsored Senate versions of the bills now incorporated into H.R. 436. Other Democratic senators, including Senators Al Franken and Amy Klobuchar, have expressed strong support for repealing the medical device excise tax.


In response to the House's passage of H.R. 436, the White House issued a Statement of Administration Policy to clarify that President Obama's senior advisors will advise him to veto the bill if it reaches his desk. The Statement also expresses the Administration's sentiment that "[I]nstead of working together to reduce health care costs, H.R. 436 chooses to refight old political battles over health care."   









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Pursuant to Internal Revenue Service Circular 230, we hereby inform you that any advice set forth herein with respect to US federal tax issues is not intended or written by The Wagner Law Group to be used and cannot be used, by you or any taxpayer, for the purpose of avoiding penalties that may be imposed on you or any other person under the Internal Revenue Code.


This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.