Flex spending accounts face hit in health overhaul
By ERICA WERNER
November 1, 2009
WASHINGTON – Those tax-free spending accounts that you and your co-workers use to help pay for dental work, insurance copayments or over-the-counter drugs face a hit under the health overhaul bills in Congress — unless a coalition that includes a powerful union, insurers and others can stop it.
Bills in the House and Senate would cap at $2,500 an employee's allowable annual contribution to a health care flexible spending account.
There is no federal cap on contributions now, though companies that offer the accounts — more than 80 percent of companies employing 500 or more workers do — typically impose their own limits, usually around $5,000.
Workers can use the accounts to save pretax income, which then can be used to reimburse a range of medical expenses, including dental and vision costs, prescription and over-the-counter medications and copays and deductibles — again without being taxed.
Capping contributions to the accounts would raise more than $13 billion over 10 years to help pay for Democratic health care legislation because it would limit the amount of employees' income that is exempt from taxation.
Our concern is that a cap of $2,500 is a definite tax on the middle class, particularly those with chronic illnesses," said Jody Dietel, executive director of Save Flexible Spending Plans and chief compliance officer at WageWorks, Inc. of San Mateo, Calif.
In addition, committee spokeswoman Erin Shields said the impact of the cap would be limited. "The provision, in addition to helping reduce the overutilization of care, also affects only a limited number of people," Shields said.
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http://news.yahoo.com/s/ap/20091101/ap_on_bi_ge/us_health_overhaul_flexible_spendingPosters note: My wife has a $3,000 flexible spending account which covers both of us. We blew right past that amount in September and would like to increase it to $4,000 for the next year. We're older so our medical expenses are higher than for most younger people. And we sure as hell did not "overutilize" health care, whatever the hell that means! What bull shit is being passed off as healthcare reform!