Skip to comments.Obamacare's FSA Contribution Cap Will Tax Chronic Medical Conditions
Posted on 07/11/2012 1:34:59 PM PDT by 92nina
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.
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.
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
-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 individuals 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 0bamacare 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.
Fortunately, the 1% FTT is only rumor.
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.
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