it's my understanding that because of Obamcare that FSA max will be $2,500 starting in 2013. While writing this law it was determined that FSA is considerd a wealthy person deduction and an advantage not available to everyone. Hence, the cap change from 5,000 to 2,500 I guess to level the 'playing field'.
If true, I totally depise this change. My pods cost me $250 every 3 months. So that is $1,000 out of my pocket without all my other medical costs for Humalog, Symlin and my various other meds for cholestrol and high blood pressure. Not to mention my 2 eye doctor, 2 foot doctor, 4 dentist visits, GP and endo visits during the year.
I can estimate my out-of-pocket costs at around $3,000 conservately and I am not weathly.
Flexible Spending Account (FSA). It's a pre-tax payroll deduction to fund your medical costs not covered by your insurance.
You decide at benefits enrollment time what you think your estimated medical costs will be. Example being $2,500 for 2013. That is spread over your paychecks for all of 2013 but the total amount is available for use on the 1st of the year. It's a great concept introduced many years ago.
A perfect example of using FSA. I needed hearing aids for both ears. The costs was $4700. So for 2011 I had an FSA amount of $5,000. The great thing the money was available for use on 1/1/2011, got my hearing aids on 1/6/11 and paid it back on a pre-tax basis over 26 paychecks.
With the higher limits I couldn't afford to buy my hearing aids.
I don't know what the laws say but from what you've said I think the problems lies in the fact that FSA is not available to all. Only employers that buy into it can offer it. I have not been eligible for a FSA account for the last 5 years because my employer did not offer it. Ideally they would find a way to make it accessible for all. I think the law has been written to keep some from having benefits that all do not have. I think it was also written to increase tax revenue. I'm not sure what the right answer is but for those of us who need it AND can get it the FSA is definitely a valuable benefit.
Doesn't that $2000 or $2600 or $5000 in your FSA come from you? You have the money in an FSA because you've deposited it into this savings account. The benefit of an FSA is that it is taken out of your paycheck pre-tax. If you're only allowed to deposit $2500, that means you can only use $2500 tax free money and the rest will be after tax. Any limit sucks for those of us with high medical bills but right now it is all up to your employer. Sounds as if this goes, all the limits will be set to the same $2500.
My point is why change the limit at all…how much extra revenue will the government get by limiting the amount by $2500? Seems the rationale is silly.
Marty, If the limit is going to be $2500, but your expenses are $3000, then all you do is pay $500 after taxes, instead of pre-tax. The difference between pre-tax and post-tax for the $500 is only going to be about $100. So, $100 over a year means that your medical costs will only up by $8 per month. That's it.
It was part of the scheme to get the health care bill under $1T. My concern is that the difference between 5,000 and 2,500 is not available on the 1st of the year. I believe the wrong group of people we targeted in this change.
The $2500 cap on FSA contributions is indeed correct. This is nothing other than a back door tax on us diabetics and anyone else who has preexisting conditions since all of us who take advantage of FSA accounts will now be taxed on as much as $2500 of additional income that had formerly been tax-exempt.
is that right? HSA is not changing?? funny they would change fsa yet not hsa... we are on high deductible plan... so pretty much cash pay, but i did find out our endo visits are 150 cash, not bad...
