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Obamacare's FSA Contribution Cap Will Tax Chronic Medical Conditions
ATR ^ | 2012-07-09 | Blake Seitz

Posted on 07/11/2012 1:34:59 PM PDT by 92nina

Current Law
Flexible Savings Accounts (FSAs) are tax-privileged accounts available to employees through an employer “cafeteria” health plan. Employees agree to make a fixed annual contribution to the account which will be deducted from their pre-tax salary. This exempts the contribution from income and payroll taxes. That money can then be used to pay for “qualified medical expenses” incurred by the account holder, his or her spouse, and any other dependents under the age of 27. The contribution amount is currently unlimited, but money left in the account is forfeited every calendar year under the so-called “use it or lose it” provision.

Scheduled Changes
Obamacare will impose a $2,500 cap on FSA contributions effective January 1, 2013. The cap will be indexed to inflation every year after 2013.

ATRF Analysis

Voluntary, account-based plans like the FSA are utilized by 35 million Americans, and are a multi-billion dollar a year cash cow. Not surprisingly, the government is trying to milk it for tax revenue by imposing a contribution cap.

The $2,500 cap on FSA contributions will increase the tax burden on participants who spend more than the cap amount on qualified medical expenses. Every dollar over the cap amount will be subject to both state and federal taxes.

This tax will not affect the average FSA participant, whose yearly contribution ($1,386 in 2008) is shy of the contribution cap. It will instead hurt the most vulnerable participants: those with extremely high medical expenses.

FSAs are most useful for individuals who have chronic conditions that require regular, costly support and treatment — common beneficiaries include diabetics and families with special needs children. The participants most likely to pay this tax, then, will be those with the highest medical burdens. This tax is made even more intolerable when one considers the average income of FSA participants: a solidly middle-class $55,000 in 2008.

Although the FSA cap is indexed to inflation after 2013, it will envelop more participants as time goes on. Insurance premium growth and health care costs consistently outpace inflation by two or three orders of magnitude. This disparity will widen in 2014, as Obamacare is projected to increase premium costs by 7.4% while inflation is expected to remain constant at about 2%. This means that the FSA contribution cap will not rise apace health care costs, ensuring that more participants will have to pay the tax if they want to maintain the same level of care.

The FSA cap is a revenue raising tactic that will hit the wallets of Americans with serious medical needs. It is unacceptable for it to be paraded as a component of “healthcare reform.”

10-Year Cost to Taxpayers
Joint Committee on Taxation: $13 billion

Read more: http://atr.org/obamacares-fsa-contribution-cap-tax-chronic-a7031#ixzz20LeAzaNR


TOPICS: Business/Economy; Government; Health/Medicine; Reference
KEYWORDS: congress; economy; obamacare; taxes
The FSA cap is a revenue raising tactic that will hit the wallets of Americans with serious medical needs.

Take this article and others I found to the fight to the Libs on their own turf; put the Left on the defensive at Digg and at Reddit and in Stumbleupon and Delicious

1 posted on 07/11/2012 1:35:10 PM PDT by 92nina
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To: 92nina

-13,000+ pages of regs that are now LAW.
-159 agecies to be up and operational
0IPAB rationing/death care panels
-16,000 IRS enforcement agents, some of whom are ARMED
-The ability to make law as whatever nthe HHS Secretary ‘deems.’ DEEMS?!!
-A BUREAUCRAT can now imprison or otherwise economically SANCTION physicians on an individual’s health ‘care’ if the State does not agree/the BUREAUCRAT does not approve.
-You PAY for not buying it.
-Your bank accounts will be monitored and DOCKED for non-compliance.

Oh. And I forgot. 1% TAX on EVERY, as in E V E R Y, financial transaction. Let that sink in.

You tell anyone you meet that these things are actually in the so-called 0bama’care’ law. Who would approve of this? WHO?

Start watching when you go out. How many older or disabled people do you see out and about or alone anymore?

25mm dead Americans is so 1970s. Go ahead. Think BIG. The progs have.


2 posted on 07/11/2012 2:23:41 PM PDT by combat_boots (The Lion of Judah cometh. Hallelujah. Gloria Patri, Filio et Spiritui Sancto.)
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To: combat_boots
Oh. And I forgot. 1% TAX on EVERY, as in E V E R Y, financial transaction. Let that sink in.

Fortunately, the 1% FTT is only rumor.

3 posted on 07/11/2012 2:34:13 PM PDT by A_Tradition_Continues (formerly known as Politicalwit ...05/28/98 Class of '98)
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To: combat_boots

If I had kids of the right qualifications, I’d definitely tell them to apply for one of those new IRS jobs, although I’m sure it will be a land rush for them given the lack of alternatives due to the Baraqqi Depression.

Also this law is guaranteed to be a “full employment” bill for high priced attorneys.


4 posted on 07/11/2012 2:41:06 PM PDT by nascarnation
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