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Wed Nov 14, 2012, 10:56 PM

Flex Spending Accounts Cut in Half

So I did my 2013 benefit enrollment today, which I'm very grateful I'm able to do, and the maximum amount I could put in tax exempt flex spending health account has been lowered from 5k to 2500. I have 2 dependents on my policy and we went thru the 5k this year by June.

And my company made sure I knew this was due to Healthcare Affordability Act. Didn't realize this was in the law and I'm just wondering if anyone knows why? Is the idea that revenue will be higher if less income is tax exempt? Sucks for me, but if it makes the plan work....

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Arrow 10 replies Author Time Post
Reply Flex Spending Accounts Cut in Half (Original post)
soleft Nov 2012 OP
BainsBane Nov 2012 #1
Honeycombe8 Nov 2012 #2
BlueStreak Nov 2012 #7
Honeycombe8 Nov 2012 #9
BlueStreak Nov 2012 #10
k8conant Nov 2012 #3
GitRDun Nov 2012 #4
soleft Nov 2012 #8
mzteris Nov 2012 #5
Lithos Nov 2012 #6

Response to soleft (Original post)

Wed Nov 14, 2012, 10:58 PM

1. You may not need it

Since more will be covered by insurance. Check ups, for example, will have no deductibles.

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Response to soleft (Original post)

Wed Nov 14, 2012, 11:05 PM

2. Yes, I knew that. I don't know why. I don't use it. It has ripped me off of $1,240.

The rules are tricky....use it or lose it. It sucks. I don't use it.

As to why they lessened the amount, I don't know why. 100% coverage of preventive exams doesn't begin to amount to the amount cut from flex.

I guess it was costing too much in taxes?

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Response to Honeycombe8 (Reply #2)

Thu Nov 15, 2012, 01:07 AM

7. The HSA seems like a much better way to go

With the flex accounts, you really should only contribute money that you are absolutely certain you will have to spend (e.g. for expensive drugs)

The HSA is a lifetime account -- no issue with use-it-or-lose-it.

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Response to BlueStreak (Reply #7)

Thu Nov 15, 2012, 09:57 PM

9. Theoretically, HSA sounds good. BUT...

the ins. cos. have made the premiums so high, now, and the deductible so high, that even HSAs are not worth it.

I had one offered at my last job, and one is offered at my current job. I ran the numbers, to the extent I could, and I couldn't find an advantage (although there could be one, in certain circumstances), but there was a for-sure downside. Pretty much, you do not have insurance coverage for the first several thousand dollars (whatever the deductible is).

In the older days, HSAs were offered with deductibles as low as $1,000. But that wasn't what was offered to me.

I've read that the ACA will have the effect of doing away with HSAs. Why? Because of the 80%-85% rule: ins. cos. must spend at least 80% to 85% of their premiums on paying claims. So that says a lot about HSAs, doesn't it? That they won't pass that rule.

Ins. cos. could lower the premiums for HSAs, and that would make them viable under the ACA. If they do that.

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Response to Honeycombe8 (Reply #9)

Thu Nov 15, 2012, 11:23 PM

10. The 80% rule is in place and they are still offering them

I don't know that the HSA policies are any more or less profitable than any other variety. The insurance companies are pretty good at pricing their policies to maximize their profit in each case. My assumption is that the HSA policies are about as profitable as the non-HSA policies.

I have a very high deductible HSA policy, which makes the monthly premium affordable to me (about $600 a month for two people in their late 50s). The insurance company (under ACA) is required to pay for a lot of routine things, but I take $10,000 of rick on the big items. That's not for everybody, but it is something we can live with. I wish it cost less. I wish we had single payer, because the actual cost would be about half what I'm paying and I wouldn't have to take that $10,000 risk. But the ACA is a heck of a lot better than where we were 2 years ago. At least if I pay my premiums, I will be covered and can't be cancelled, which kind of seems like the textbook definition of "insurance" in the first place.

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Response to soleft (Original post)

Wed Nov 14, 2012, 11:06 PM

3. $2500 is the limit effective 1/1/2013 but...

I don't even get to pay my premiums pre-tax as a federal annuitant, let alone an FSA.

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Response to soleft (Original post)

Wed Nov 14, 2012, 11:15 PM

4. Here is the link to Obama site that discusses it

http://www.barackobama.com/truth-team/entry/the-facts-behind-americans-for-tax-reforms-five-claims-about-obamacare/

They are saying average American uses $1,250 so limiting it to that...think it is a minor revenue raiser.

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Response to GitRDun (Reply #4)

Thu Nov 15, 2012, 08:27 AM

8. Dang, I used every penny for therapy

My insurance only covers 70%.

And not only that, it reduced my income so every year I got a refund.

My company sucks tho making it seem like it was because of HCA. I'm suprised they didn't try and make a bigger point of this earlier before the election.

Thanks for the link!

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Response to soleft (Original post)

Wed Nov 14, 2012, 11:16 PM

5. Not true.

This was in the works way before the healthcare afford ability act.

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Response to mzteris (Reply #5)

Wed Nov 14, 2012, 11:26 PM

6. This is my understanding

This precedes the Healthcare affordability act. In fact, some earlier versions supposedly killed it altogether.

Personally, the "free screenings" will not cover the loss in tax free flex spending. However, if something were done to the pharmaceuticals or in making sure insurance threw a broader coverage down for some things, then it would not be as important.

L-

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