How the Health Care Legislation Will Affect Me
My joke has been that what bothers me the most about the fact that health care legislation passed is that now when I give talks on health care I will be expected to be familiar with what is in the bill. So, thanks to Ezra Klein I found this helpful timeline. It included:
Limiting Health Flexible Savings Account Contributions. Limits the amount of contributions to health FSAs to $2,500 per year, indexed by CPI for subsequent years.
That provision takes effect in 2013. I assume that this refers to medical savings accounts, of the sort that I use–and I contribute more than twice that much. I guess that won’t be for long. I contribute a lot because I know what the arithmetic says is going to happen to Medicare by the time I need it. I guess the notion that I might want to save for my own medical expenses is the sort of thing that health care reformers cannot abide.
[UPDATE As commenters have pointed out, the term FSA could mean “flexible spending account” rather than what the House Committee report called it, which was a “flexible saving account.” I do not have a flexible spending account, which is something you get through an employer. So this provision may not affect me.]
Mar 22 2010 at 7:39pm
They would rather you buy insurance coverage you don’t need and don’t use. If you saved some of that money in an HSA, it can’t be used to fund the healthcare of others.
Mar 22 2010 at 7:40pm
I think that’s in reference to Flexible Spending Accounts not Health or Medical Savings Accounts. I assume it’s a typo where they wrote savings instead of spending (not that uncommon).
Mar 22 2010 at 8:15pm
If the limit is only on flexible spending accounts, then there is no need to worry. These accounts have annual use it or lose it provisions, so they already aren’t useful for long term saving.
Mar 22 2010 at 8:21pm
My guess is that you receive this from the university that you work for? For those of us who don’t work in academia – most employers already cap the amount an employee can put into a medical FSA to $2500 or less. In addition – most operate on a use or lose it rule with a time period of a year. You are the first person I know who has a plan that doesn’t have either of these limitations.
Mar 22 2010 at 8:33pm
I guess the notion that I might want to save for my own medical expenses is the sort of thing that health care reformers cannot abide.
Of course I don’t have to tell a libertarian that it is possible to save for future expenses outside of a government-sanctioned account…
Mar 22 2010 at 8:47pm
I really have no idea what you’re talking about as far as private employers capping HSA contributions at $2,500. The difference between an FSA and an HSA/MSA is that the HSA/MSA does not expire at the end of the year. HSA/MSAs are also only available if you have a high-deductible health insurance plan. I’ve used one at my private employer and there were no contribution limits.
Of course, that means that Dr. Kling’s quote may not actually apply to HSA/MSAs.
Mar 22 2010 at 9:04pm
I have a FLEX plan account…with it we don’t have to pay income taxes on our annual premiums or copays. Last year we spent $8000 out of pocket on health care, so our flexible spending acct. saved us approx 20% of that, or about $1600. So the new law will end up costing us money, and I don’t anticipate any reductions in our premiums either. By the way, we’re “solid” middle class; both my husband and myself are educators. And we don’t earn anywhere close to $200,000!
Mar 22 2010 at 9:22pm
Reading what the Health Care bill will do for personal Health Savings accounts I’m not sure I am happy with it. I do not see why the government felt the need to put that stipulation in the bill. It seems to me that the only thing it does is make it hard for normal everyday people to be ready for a medical emergency.
It also seems like all they are trying to do is force people into buying health insurance from them that they don’t necessarily need. I don’t agree with this and I think that a person should be allowed to deposit whatever amount of money into their health FSA as they see fit, I don’t believe the government should at all regulate a person’s personal savings and certainly not money that is used for health care.
Mar 22 2010 at 9:23pm
There is indeed some confusion about whether this limit will apply to MSA/HSAs. However it will apply to FSAs. That means that from now on my wife and I will no longer be able to take out $5,000 a year to pay for our own medical expenses without having to go through the insurance company bureaucracy and spend it on what for us is the best medical value.
Thank you, Barack. Thank you, Ezra. Way to fight for the patients and against the insurance companies.
Mar 22 2010 at 9:55pm
This isn’t a traditional health savings account they are talking about, so you aren’t effected. FSA’s have a coverage period (usually a year) and then it’s gone. It’s actually a budgetary trick, an indirect tax. The idea behind it was that if you want to use more of your own money to cover out-of-pocket expenses it could then be taxed whereas FSA’s spending is not taxed. It’s basically a tax scheme.
It’s also interesting they would go this route since many people with chronic illnesses and life-threatening diseases often face out-of-pocket costs in excess of $4,000 – even with insurance. An index to $5,000 would have made more sense (actually not capping it at all would make more sense but whatever) since that would actually cover most out of pocket expenses, but I doubt that would have raised the required revenue.
Mar 23 2010 at 3:17pm
A $2500 limit on FSA’s is definately a tax on health care for the middle class. Both my husband and I have chronic medical issues, who doesn’t by the time you reach 50? Between co-pays, eyeglasses, dental expenses, contact lenses, and prescriptions the $5000 I have set aside annually barely covers our expenses. By the way, I understand beginning January 1, no over the counter drugs are eligable for FSA accounts. Therefore, anyone who buys their aspirin, tylenol, previcid or contact lense solution with their FSA card will no longer be able to.
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