via Wall Street Journal

A looming tax on generous employer health plans could imperil flexible spending accounts, a popular benefit that lets employees set aside tax-free money for certain medical expenses.

The Affordable Care Act’s tax on high-cost employer health insurance is scheduled to start in 2018, when it will impose a 40% levy on benefits that exceed a government-set threshold. Employers already are reviewing or trimming health plans to minimize the effect of this “Cadillac tax,” benefit experts say.

The tax threshold takes into account not just the value of premiums, but also other benefits offered by employers—including money put in flexible spending accounts. by workers or their employers.

Benefits consultants say that will prompt many employers to limit the amount workers can put in the accounts, commonly called FSAs—or do away with the accounts altogether. Few employers contribute to the accounts, but those that do could stop.

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