Will Your FSA Go Away?

Watch out: Flexible Spending Accounts (FSAs) are in the sights of the healthcare “reformers.”

“Reformers” are really freedom-robbing individuals desiring to take over and control as much of American society as they can.  They hide behind populous little-guy-friendly phraseology, but don’t buy it for a minute… they’re out to take away your assets, your freedom of choice, and your tax dollars.

The FSA is a powerful tool and good for us little guys because they let us pay for necessary health care costs with pre-tax dollars.  An employee elects to put bucks into an account on a pre-tax basis and take it out tax free for allowable medical expenses.

Since the typical American lives paycheck to paycheck and can’t deduct any medical expenses until they exceed 7.5% of Adjusted Gross Income (don’t worry about what it means… most don’t ever get there — you gotta be really sick to hit that number), and since these guys pretend to be the friend of the little guy, you’d think they’d love it.

Wrong.

The FSA gives you control, and they don’t want you to have control.  They want it.  You can only spend on what they say with whom they say.

Here’s the logic one of these “reformers” uses to argue against the FSA:

  • FSAs encourage excess use of health care, whether it’s “medically necessary,” “effective, ” or of “meaningful health value.”
    • Notice that they assume you’re too stupid to decide what’s best for you.  They’re the smart ones; they’ll decide what necessary, effective and meaningful.
    • What’s more, they assume that just because it’s tax free you’re going to spend it.
  • The “use it or lose it” nature encourages wasteful spending.
    • I actually agree with this, but the answer isn’t to wipe out FSAs, it’s to allow carryover into future years.
  • FSAs are “complicated” (we’re apparently too stupid to understand the tax reporting requirements) with little value to lower bracket taxpayers.
    • The example they give is of the 15% taxpayer putting in $100/month and “only” saving $274 in taxes.
    • They ignore the fact that that $274 is probably pretty important to a 15% tax bracket person.
    • The implication is that the FSA is a boon to high-bracket taxpayers, but most of them own companies or partnerships and are excluded from FSA participation.
  • Health Care Reform is likely to include subsidies for low-deductible health care coverage.
    • Think about this stupidity.  Here’s how this logic flows:
      1. We can’t have FSA plans because they encourage spending (of our own money) on “unnecessary,” “ineffective” health expenditures, and
      2. Besides, we’re gonna subsidize your health insurance so that all those expenditures will be covered and paid with somebody else’s money.
      3. Do they honestly think that anyone will be more careful spending insurers’ money or g0vernment money than they will spending their own money?

Give me a break!! That’s stupidity, arrogance, and an ill-disguised power grab all wrapped into one.

But since it seems as if much of America is convinced that — finally — you really can get something for nothing, I’m sure Congress will vote for this insanity.

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