I'm not sure how many of my readers are truly following the debacle that is Obamacare, but something needs to be done. And by that, I mean stop it. I don't often get on a political soap box unless things really bother me.
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Do any of you use a Flexible Spending Account (FSA) if offered by your employer? If not, you should. Here's how it works: you pick an amount to be set aside from your paycheck into a tax-free account that can be used for all sorts of medical needs from co-pays, to doctor visits, to buying Advil at Walgreens (or CVS or Sav-On or anywhere except Tijuana farmicias). The benefit is that you get to use the money
before taxes. It's essentially like getting some FREE money! Otherwise, you would spend the same money on co-pays or doctor visits, but you would already have paid tax on it.
Anyway, this doochbag in Montana is suggesting that the government cap the amount you can sock away into your FSA at $2,500. I don't spend that much annually, but I know a lot who double that. Who is this gonna hurt you ask?? The middle-class hard working tax payers who need the most breaks.
Read the copyrighted message below for more info.
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SAN MATEO, CA - October 18, 2009 - In his recent address to Congress, President Barack Obama emphasized three key principles behind his health care reform plan. He said it will "build on what works and fix what doesn't," that "nothing in our plan requires you to change what you have" and that "the middle class will realize greater security, not higher taxes."
Unfortunately, Senate Finance Committee Chairman Max Baucus, D-Mont., violates each of these principles in his recently introduced health care reform bill by proposing to impose a $2,500 cap on contributions to flexible spending accounts (FSAs) -- voluntary accounts that enable participants to use pre-tax dollars to pay for essential out-of-pocket health care expenses like deductibles, co-payments, prescription drugs, vision care, dental and orthodontic costs, office visits and medical supplies.
Baucus' proposed cap would radically change the structure of FSAs used by as many as 35 million participants and directly harm the middle class, as plan participants earn approximately $55,000 annually on average. Further, it would undermine a consumer-directed approach to health care, popular with both employers and employees, that succeeds in controlling costs.
Most disturbingly, restricting the use of FSAs would impose the greatest burden on working individuals and families with the highest health care costs -- those who suffer from chronic illnesses.
More than four of every 10 Americans have chronic conditions such as diabetes, heart disease, and asthma and other pulmonary diseases, incurring out-of-pocket medical costs averaging nearly $4,400 per year, according to the Robert Wood Johnson Foundation. Thus, millions of hardworking Americans could find their taxes increasing by hundreds, even thousands, of dollars if the legislation is passed in its current form.
Without the cost savings from an FSA, many individuals and families could be forced to forgo necessary medical treatment, prescriptions and supplies for financial reasons, resulting in a deterioration of health and an increase in hospitalizations and overall health care costs. This is the opposite of what health care reform is supposed to achieve.
It is bad enough that Baucus wants to severely restrict FSAs for tens of millions of Americans. But adding insult to injury, he also proposes to include FSAs in his proposal to apply an excise tax on high-cost insurance plans -- a move that may cause some employers to drop FSAs altogether. And his legislation proposes to limit the use of FSAs for over-the-counter medications without a prescription, which would unnecessarily burden patients and their doctors.
The Senate Finance Committee -- or failing that, the full Senate -- should amend the Baucus bill and raise the cap on FSAs to a more reasonable amount, indexed for inflation, to avoid large tax increases on the sickest Americans. Senators should also strengthen FSAs by allowing participants to roll over any unused FSA funds into the next year (currently, they must "use it or lose it") or to have the money returned to workers and taxed as ordinary income. This will encourage greater participation, which will help hold costs down.
FSAs work and should not be restricted. They are part of the solution, not the problem. They encourage participants to take an active role in managing their health care and serve as a safety net for many middle-class Americans struggling to afford rising health care costs. If maintained or strengthened, they will only enhance the positive impact of health care reform.
JOE JACKSON is CEO of San Mateo based Wageworks and chairman of the advocacy group Save Flexible Spending Plans. He wrote this article for the Mercury News.
Copyright 2009, NewsBank. All Rights Reserved.
