I mentioned this in passing when I recently wrote about open enrollment season, but I wanted to remind you that healthcare flexible spending account (FSA) contribution limits have been capped at $2500 for 2013. In most cases, this will be a reduction vs. what’s been possible in the past.
This change actually traces back to the Patient Protection and Affordable Care Act (i.e., “Obamacare”). Until now, FSA limits have been determined by employers and many (if not most) families have been able to set aside upwards of $5000/year. Depending on your tax bracket, that was a huge benefit.
Of course, you had to be careful with how much you set aside — especially with the lost of coverage for OTC items in 2011 — due to the horrible use-it-or-lose-it nature of these accounts. But if you were careful, you could save a ton on taxes. That’s still possible, of course, though the magnitude of those potential savings has been reduced.
While the IRS has solicited comments on the use-it-or-lose-it nature of FSAs — they’re considering dropping that requirement in light of the new $2500 limit — they haven’t made any changes thus far. If I hear anything further about this, you’ll be the first to know.
We were told by our insurance management people that the year 2014 will include a “carryover” of $500. So, the most I can lose is $2000 if I don’t spend any of my $2500 in free money that Obama gives me each year. Last year I had that amount gone by February with my wife’s surgery. What we do now is designate only one person to get sick each year and take turns depending on who is the worst off. As soon as all the Hope people get jobs, this should increase to $5000 for each person, whether employed, a citizen, an email buddy of someone in America or anyone who can still hold out their hand for all the “free” stuff that USA provides to anyone who steps on American soil.
God Bless America
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