House passes bill restricting FSA, HSA abortion reimbursement

WASHINGTON—Employees no longer could receive tax-free reimbursement from their flexible spending accounts or health savings accounts for out-of-pocket expenses related to most abortions under a bill approved by the House of Representatives.

The measure, H.R. 3, approved Wednesday on a 251-175 vote, would require that FSA and HSA reimbursement for abortion related expenses would be added to employees' taxable income. Under current law, such reimbursements are tax-free.

The restriction would not apply to an abortion performed in the case of a pregnancy that resulted from rape or incest. It also would not apply if a woman suffers from a physical disorder, physical injury or physical illness that would, as certified by a physician, “place the woman in danger of death unless an abortion is performed, including a life-endangering physical condition caused by or arising from the pregnancy itself,” the bill says.

Under an earlier version of the bill, it wasn't clear if employers with self-funded health care plans would have been able to continue to take a tax deduction for abortion-related expenses.

That version, though, was replaced on the House floor with language drawn from another bill, H.R. 1232, which the House Ways and Means Committee earlier approved.

It is unlikely that the Senate will take up the House-passed bill. In addition, if Congress were to pass the measure, the Office of Management and Budget said President Barack Obama's advisers would recommend that the President veto the bill.