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I was wrong and I am big enough to admit it.
A while back, I wrote a blog post saying that health care reform wouldn't affect me. Well, I have recently learned otherwise. Turns out, health care reform is going to have a negative impact on our family's ability to contribute to and use our Flexible Spending Account (FSA), a benefit currently offered by Robert's employer. In addition, there is speculation in the media that employers may stop offering FSAs to their employees as they begin to implement the provisions in the health care reform law.
Surprisingly, we haven't used a FSA until this year, so I definitely see the irony in this situation.
In previous years, I committed myself to saving all our medical receipts and trying to deduct part of our out-of-pocket medical expenses on our income taxes. And let me tell you, as a person living with chronic illness, I racked up the out-of-pocket medical expenses. Using this method, I could only deduct expenses that were over 7.5% of our adjusted gross income (AGI). (Since I am not an accountant, I let Turbo Tax figure this out for me.)
With the FSA, we now use pre-tax dollars from Robert's paycheck towards things like medical and dental visit co-pays and deductibles, prescription co-pays, over-the-counter medications, durable medical equipment and supplies for my CPAP machine.
I am learning that the benefits of a FSA include:
- peace of mind knowing that we have a nest egg of money available to pay our out-of-pocket medical expenses, even when money is tight
- having all the FSA money upfront at the beginning of the benefit year to help us meet our insurance plan deductibles (which keep going up and up)
- not having to put a doctor's appointment off or worry about filling a prescription because we don't have the money for the co-pay
- coverage for over-the-counter medications, like newer allergy and heartburn medications which no longer require a prescription
- not having to worry about accumulating receipts totaling 7.5% of our adjusted gross income in order to qualify for a tax credit for medical expenses
Unfortunately, the recent health care reform legislation is going to negatively impact FSAs in two ways: 1) decrease how much money can be contributed to them and 2) restrict the use of FSA money to purchase over-the-counter medications. As explained by the website Save Flexible Spending Plans:
Health Care Reform Limits Flexible Spending Accounts
The recently passed health care legislation caps annual contributions to flexible spending accounts (FSAs) at $2,500 beginning in 2013 in order to fund a small portion of (health care) reform. The new law also restricts FSAs by cutting over-the-counter medicines from the approved uses for FSA monies for individuals purchasing items without a prescription.
While the efforts of FSA supporters successfully prevented this benefit from being eliminated (entirely), the fight to preserve FSAs is likely to continue in the coming years.
Beyond the use of FSAs as a valuable budgeting and cost-saving tool, the benefit enables users to take responsibility for their health care regime and treatment. The benefit is particularly valuable for individuals and families battling chronic conditions who require ongoing care and medical supplies.(That would be me!)
President Obama and Congress should protect FSAs from additional restrictions and allow the program to continue to serve as a safety net and solution for millions of Americans to cover their out-of-pocket health care expenses.
What Can You Do?
Please visit Save Flexible Spending Plans to learn the facts about FSAs and how they especially help persons living with chronic illnesses. Then visit the Action Center tab to send an e-mail to your elected officials to tell them how you feel about the upcoming changes to how FSAs will work. Be sure to mention how a FSA helps you or your family member better manage the out-of-pocket expenses of their chronic illnesses.
The more I educate myself, the more I realize what a powerful tool a FSA is. I am literally kicking myself for not taking advantage of it until now. If you take the time to explore the Save Flexible Spending Plans website, I guarantee you'll be signing up for a FSA the next time open enrollment time comes along.
Please help me preserve and expand this benefit for all Americans, especially those of us living with and managing chronic illnesses.
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