A flexible spending account or flex account for short is a way to save money pretax, and use that money during the year for medical expenses not covered by your plan, copayments, and over the counter health items. The one possible downside is that any money not spent from the account by the end of the calendar year is forfeit. For those that take advantage of the flex account, it’s good to pay attention to your balance and as the end of the year approaches make a discretionary purchase such as eyeglasses that likely aren’t covered in full. This pretax status means that if you are in the 28% bracket and put aside $2000, you benefit by $560. For some people, not a huge amount, but for others, over $45 per month they can spend on other items.
Now, a recent proposal from the Senate Committee on Finance recommends eliminating flex account as an option to help fund a small portion of the costs for health care reform efforts. This is very unfortunate as those most likely to benefit from these accounts are those with chronic conditions who require ongoing care.
A grassroots effort Save My Flexplan has been created to bring a message to Washington, telling congress to reconsider this proposal. Let’s not let them chip away at these small benefits without tell them how we feel.
Joe
I had a flex account once, rather hubby did through work and it was nice. But, so few people have it I’m not sure it would be much of a loss; perhaps not enough to make a difference. No one I currently know has one, or did when we did. I do believe we need health care reform. Too many don’t have it, and employers are shirking their responsibilities by altering things at work so they don’t have to pay for insurance. Leaving lots of hard working folks out in the cold.
Some businesses around here have gone as far as firing people as employees, then hiring them back through an agency so they don’t have to give them benefits. The benefits being lost are insurance, flex funds etc. Meanwhile the people at the top are getting fatter with all their fringe benefits. sigh
Sandy
Ever since this economic mess started, I knew that it wouldn’t be too long before the government would go out of its way to keep its revenue up. At first, by the fringes at small chunks such as FSAs, but it really knows no limits. I can imagine a bunch of other ways that it’ll try to come after, slowly but surely eroding our livelihood.
Thanks for pointing this out, Joe.
Hi Sandy, thanks for stopping to visit my blog.
From the Winston-Salem Journal, “According to industry estimates, approximately 48 million Americans use FSAs, and the average participant saves about 30 percent in taxes because FSA funds are exempt from federal and state income taxes as well as FICA.” Is that 48 million people or families? I don’t know, but either way, it’s a lot of people. My 10 year old’s braces were nearly $5,000. Insurance picked up $2000. I was counting on the $3000 from me being pretax money. No matter how you slice it, it’s a transfer of money. $3000 off the top, or nearly $4500 I have to earn to net the $3000.