New Limits on Flexible Spending Accounts
The Health Care Bill will put a $2500 cap on FSA contributions and restrictions on using FSAs to purchase over-the-counter medicines. These restrictions are to take place next year. Currently there are no limits on these accounts which allow eligible persons to use before tax dollars to pay for medical expenses.
According to Jody Dietel, chief compliance officer at Wage Works, a San Mateo California company specializing in health care plan administration, this new provision represents a “Radical Change”.
Why do this when it makes medical care easier and less expensive for the average worker? The elimination is expected to net the government $68billion in additional revenue according to Ms. Dietel.
Another gotcha! Ms. Dietel notes the health care reform legislation also creates a 40% excise tax on flexible spending accounts that employers will have to pay if they offer an FSA to their employees.
“The excise tax is very problematic,” Dietel said. “If I am an employer, I am not going to pay a 40% excise tax to have a flexible spending account plan.
The above is thanks to Thomas Cheplick from Cambridge, MA
The president said that the new health care legislation would not cost anything? The above is an example of using smoke and mirrors.
