by Chris Wysocki | January 1, 2011 1:30 pm
While you were celebrating the new year ObamaCare made your Flexible Spending Accounts and Health Savings Accounts much less valuable.: As of January 1st new restrictions on their use for over-the-counter medications, along with doubled penalties for paperwork screwups, will cause headaches for millions of Americans.
And no, you can’t just buy an aspirin for that headache with your FSA or HSA debit card.: Not unless you get a prescription from your doctor first.: If you try the IRS will ding you with a 20% tax penalty.
There are now more than 15,000 products which fall under the new rules.: The goal of the change is to raise $10 billion in new revenues from the penalties paid for “misuse” of FSA and HSA dollars.
But wait, it gets worse.: Come January 1, 2013 the most you can put into your FSA will be $2500, half of the current $5000 annual maximum.: Again, the goal is to garner more tax revenue for ObamaCare by moving your income away from pre-tax FSA contributions.
According to at least one study the changes translate into a significant new tax increase.
According to savemyflexplan.org, an employee who is in the 28% tax bracket and contributing $2,000 to their FSA each year could see their annual medical expenses increase by approximately $780 in 2011. This estimate doesn’t take in to account state taxes, so for those with a state income tax the amount could be significantly higher.
Then there’s the hassle factor.: Your doctor is already overwhelmed with paperwork.: Does he really have time to write everyone a prescription for Tylenol?: I know that my doctor requires an office visit for prescription renewals which of course results in a co-pay.: More co-pays will drain our smaller FSAs even faster.
Happy New Year, from ObamaCare!
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