[Congressional Record Volume 150, Number 87 (Tuesday, June 22, 2004)]
[House]
[Pages H4663-H4665]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                WORKING FAMILIES ASSISTANCE ACT OF 2004

  Mr. CANTOR. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 4372) to amend the Internal Revenue Code of 1986 to provide 
for the carryforward of $500 of unused benefits in cafeteria plans and 
flexible spending arrangements for dependent care assistance.
  The Clerk read as follows:

                               H.R. 4372

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Working Families Assistance 
     Act of 2004''.

     SEC. 2. CARRYFORWARD OF UNUSED BENEFITS IN CAFETERIA PLANS 
                   AND FLEXIBLE SPENDING ARRANGEMENTS FOR 
                   DEPENDENT CARE ASSISTANCE.

       (a) In General.--Section 125 of the Internal Revenue Code 
     of 1986 (relating to cafeteria plans) is amended by 
     redesignating subsections (h) and (i) as subsections (i) and 
     (j), respectively, and by inserting after subsection (g) the 
     following new subsection:
       ``(h) Carryforward of Certain Unused Benefits for Dependent 
     Care.--
       ``(1) In general.--For purposes of this title, a plan or 
     other arrangement shall not

[[Page H4664]]

     fail to be treated as a cafeteria plan solely because 
     qualified benefits under such plan include a dependent care 
     flexible spending arrangement under which not more than $500 
     of unused dependent care benefits may be carried forward to 
     the succeeding plan year of such dependent care flexible 
     spending arrangement.
       ``(2) Dependent care flexible spending arrangement.--For 
     purposes of this subsection, the term `dependent care 
     flexible spending arrangement' means a flexible spending 
     arrangement (as defined in section 106(c)) that is a 
     qualified benefit and only permits reimbursement for expenses 
     for dependent care assistance which meets the requirements of 
     section 129(d).
       ``(3) Unused dependent care benefits.--For purposes of this 
     subsection, with respect to an employee, the term `unused 
     dependent care benefits' means the excess of--
       ``(A) the maximum amount of reimbursement allowable to the 
     employee for a plan year under a dependent care flexible 
     spending arrangement, over
       ``(B) the actual amount of reimbursement for such year 
     under such arrangement.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2003.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Virginia (Mr. Cantor) and the gentleman from Maryland (Mr. Cardin) each 
will control 20 minutes.
  The Chair recognizes the gentleman from Virginia (Mr. Cantor).
  Mr. CANTOR. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, families today shoulder tremendous financial burdens. 
The USDA's 2003 report estimates two-parent middle income families 
spend between $9,000 and $10,000 a year to raise one child. With 61 
percent of working families relying on some form of child care, costs 
add up very quickly especially in families with more than one child. 
But it is not just child care expenses that families face. Many 
families have non-child dependents, including disabled parents or 
spouses living at home.
  Dependent care accounts were created to assist families with two 
working parents to care for the young children or help these families 
who care for a disabled spouse or parent. These accounts allow up to 
$5,000 to be withheld pretax to help pay for this important care. 
Unfortunately, these accounts are not being utilized to their fullest 
extent. They were created in a use-it-or-lose-it fashion which often 
causes its users to underestimate the amount of money they need to put 
away, shortchanging the very people it was intended to help.
  In 2002, the average contribution to these accounts was $3,024 with a 
net tax savings of $690, but this average contribution is almost $2,000 
below the allowed contribution limit. The result is most families are 
missing out on almost 40 percent of the benefit.
  Mr. Speaker, H.R. 4372, the Working Families Assistance Act, gives 
families peace of mind by allowing them the flexibility to roll over up 
to $500 of their money into the next year flexible savings account. So 
if you overestimated the amount you would spend on dependent care, you 
will now have a cushion to ensure your flexible spending account 
investment does not completely disappear.
  The Working Families Assistance Act gives families the chance to 
realize the full tax benefit of this important program.
  Mr. Speaker, I reserve the balance of my time.
  Mr. CARDIN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, let me thank my friend from Virginia for bringing 
forward this legislation which I support. I think it is a very 
important change in the flexible spending arrangements that are 
permitted under the Internal Revenue Code. And I thank the gentleman 
from Virginia (Mr. Cantor) for bringing forward this legislation.
  Mr. Speaker, as my friend has indicated, this bill would permit a 
taxpayer to carry forward up to $500 of unused benefits in a dependent 
care flexible spending arrangement from one year to the next plan year. 
The flexible spending arrangements are a way that you can use pretax 
dollars to pay for expenses that are, according to what the policy 
makers have determined, areas that we want to encourage our 
constituents to be able to spend. This is in dependent care expenses, 
to take care of our children. This is certainly an area where it is 
becoming more and more difficult for working families to be able to 
afford dependent care for their children.
  The flexible spending arrangements allow them to use pretax dollars 
in order to offer some help and assistance. The problem with the 
flexible spending arrangements is that you have to determine at the 
beginning of the year how much money you are going to spend for 
dependent care. If you are wrong and you put away too much money, you 
lose that money. That is certainly a pretty harsh penalty for 
misjudging the amount of money that you will need for dependent care. 
And, therefore, this bill would allow a taxpayer to roll over up to 
$500 from one tax year to another. And it certainly makes sense to make 
this modification in our Internal Revenue Code.
  Mr. Speaker, I might point out though that I am disappointed that we 
are not doing more, not doing more for dependent care in our society. 
In the committee that I serve on, the Committee on Ways and Means, we 
have looked at authorizing additional day care aid to our states. In my 
own state of Maryland the only way that you can get assistance on 
dependent care is to go on to cash assistance welfare. That does not 
make a lot of sense.
  Prior to a year ago, we were helping working poor in our state with 
dependent care from the state government using Federal assistance. 
Well, we have not increased that Federal assistance. I would urge us to 
consider increasing the amount of dollars made available for safe, 
affordable day care for our constituents.
  In the meantime, Mr. Speaker, I do support H.R. 4372. It is a step in 
the right direction. And I would encourage my colleagues to accept this 
bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. CANTOR. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I appreciate the remarks of the gentleman from Maryland. 
I think this, again, is a tremendous step forward in giving working 
families the ability to project what their dependent care expenses 
would be for the upcoming year and then to give them some flexibility 
if they do not quite hit the mark, so to speak. And this provision, 
this legislation echoes what we have done in the health savings 
accounts arena a few weeks ago in this House.
  Mr. Speaker, I yield 3 minutes to my colleague, the gentleman from 
Minnesota (Mr. Kennedy).
  Mr. KENNEDY of Minnesota. Mr. Speaker, I rise today in strong support 
of the Working Families Assistance Act and would like to thank my 
friend from Virginia for taking the leadership role in this important 
piece of legislation.
  We should be doing everything possible to make it easier for parents 
to raise their children. The Working Families Assistance Act does just 
that, by helping to ease the burdens of dependent care for hard working 
families. Currently, 22 percent of employers offer dependent care 
flexible savings accounts or FSAs to their employees.

                              {time}  1145

  Employees may take $2,500 individually or $5,000 per married couple, 
put it in that FSA to pay for dependent care. Dependents, for purposes 
of the FSA, are children under age 13 or individuals such as disabled 
parents who require full-time care due to physical or mental condition.
  Parents can use the money in these accounts to pay for day care, 
nursery care, or even have an adult relative care for children; but 
only 14 percent of eligible families participate in these FSAs. Why? 
One of the big reasons is that, like the health care FSA, employees 
must forfeit any unused funds back to their employer at the end of the 
year.
  The use-it-or-lose-it provision has made these accounts a bad fit for 
many families who are trying to create and keep a budget for the year; 
and for those who use dependent care FSAs, many families are forced to 
underestimate the amount of money they will need for the year so they 
do not lose money at the end of the year, essentially defeating the 
point of the account.
  Recently, we passed legislation allowing hardworking families to 
carry over $500 from health FSAs. That is what we are doing here today 
for child and dependent care. The Working Family Assistance Act would 
fix that problem by allowing families to carry over

[[Page H4665]]

$500 into the next year's FSA. This change will give parents a safety 
net as they try to predict their family's dependent care costs.
  This bill also gives parents more choices and more flexibility in 
meeting their family's needs. We should be taking every opportunity we 
can to let families keep and use their own money to raise their 
children.
  I am pleased to be one of the sponsors of this legislation to help 
working families meet their dependent care needs. I urge my colleagues 
to support this legislation.
  Mr. CANTOR. Mr. Speaker, I thank the gentleman from Minnesota (Mr. 
Kennedy) and the gentleman from Maryland (Mr. Cardin) for their 
remarks, and I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Graves). The question is on the motion 
offered by the gentleman from Virginia (Mr. Cantor) that the House 
suspend the rules and pass the bill, H.R. 4372.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

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