Comments on: How Flexible Spending Accounts SHOULD Work

By: tony

tony — Mon, 28 Mar 2011 02:26:17 +0000

Mike B, sorry but I don’t think that is what this old post is driving at. you can only have a HSA if you have a high deductible healthcare plan. So if you don’t then you can’t have an HSA

By: Mike B.

Mike B. — Fri, 24 Dec 2010 20:38:05 +0000

@Mike: Food is taxed, generally. Some (not all) states exempt food from their state sales tax; medical care is likewise exempt from sales tax. We’re not talking about sales tax, though — we’re talking about federal income tax.

When you buy groceries, you do it with after-tax money. When you buy health care, you can do it with pre-tax money in certain cases like the FSA, but it’s generally also with after-tax money. If you have extreme healthcare costs, you can deduct them.

What this (old) post is really driving toward is wishing that FSAs would turn into HSAs — which are tax-free for healthcare, and do accumulate year-to-year.

By: Mike

Mike — Fri, 09 Jul 2010 14:15:19 +0000

Why not just make health care tax-free? Like food, everyone needs it. Food isn’t taxed (generally), so it would be an easy way to make health care more affordable to all. I haven’t heard this idea come up in the congressional deliberations on Obama’s Health Care Reform agenda. Why?

By: Sam

Sam — Wed, 13 Jan 2010 03:07:28 +0000

Can someone explain the rationale behind the use it or lose it rule? Its your money, if you don’t spend it, you should either get it back and have to pay tax on it, or you should be allowed to carry it forward to the next plan year (subject to a maximum accumulation/cap) – why make such a restrictive rule?

By: Jose Anes

Jose Anes — Sun, 28 Aug 2005 17:03:23 +0000

Personal Spending Accounts have been in the agenda for the current congress. At some point there was a proposal stating that money not used could be carried over. Maybe it will be discussed when the Congress comes back from recess.

By: MM

MM — Mon, 22 Aug 2005 16:29:51 +0000

I love this idea!

By: FMF

FMF — Wed, 10 Aug 2005 16:48:50 +0000

I agree — it seems all messed up from a practical applications standpoint. It’s so bad that it’s almost not worth the hassle for me.

By: Kris

Kris — Wed, 10 Aug 2005 12:57:13 +0000

The way I understand it, any forfeited money goes back to the empoloyer.

In my case, my employer has commited to returning any forfeitted money back to the employee. They are looking into ways to carry this over tax-free, but if that doesn’t work, they will cut bonus checks for the ammount. In this case we will be taxed on the money, but won’t lose it!

My employer also matches medical FSA contributions 2 for 1 up to $1000 matching. I put in $500, the company puts in $1000. Why wouln’t you without the threat of losing it?

The reason my company is doing this is in an effort to move toward a medical savings account model with high deductible insurance only covering high dollar events. The goal is to enable employees to build a medical nest egg to cover the difference.