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Kill the Flexible Spending Account

I hope my friends at Save Flexible Spending Plans will forgive me for saying this, but I think it’s time to kill the FSA. Really.

In case you have no idea what I’m talking about, the Flexible Spending Account is an account that lets you take money out of your paycheck, pretax, and get it back when you have a co-pay, or any unreimbursed medical expenses. Prior to 2011, you could also use it for OTC (over the counter) medicine or other first aid products. Now, aside from insulin, you must have a prescription for any medicine you wish reimbursed. Once you have an expense, you need to submit a copy of your bill to your administrator, as companies usually outsource this process, sometime to the insurance company, other times to another company specializing in this. If approved, you get a check in the mail a few weeks later. Sounds like a lot of effort, doesn’t it? Time and effort by both you and the guy reviewing your bills. Somebody is paying for this, and the expense is wasted, spent on paper pushing not on healthcare.

There’s more to this, as if it weren’t complex enough, you have one chance to decide how much money to put in for the year, usually early November the year prior. Your kid needs braces, and you find out in February? Either Junior waits until next January or you miss using your flex account to fund the braces. The spouse need a $1500 root canal? There’s no planning for this. To top it off, any money you don’t spend by the end of the year (plus grace period if your company allows it) is lost. Presumably this offsets those who got back money they never deposited, perhaps leaving the company before the end of the year.

In my daily travels, I frequently find myself driving past Walden Pond, and the above quote comes to mind. With this in mind, I suggest that every change congress wishes to enact to the tax code must always create less code, not more. Instead of creating new accounts, create fewer. With regard to the FSA, kill it, and in its place offer a deduction, even for non-itemizers. The current FSA rules are a disservice to those who may need it most, those with unexpected expenses, and those who are fearful they can’t predict their cost and don’t want to risk losing their deposit.The alternative is the continued tinkering. More rules, more adjustments, more unhappy participants and employers. Stop this craziness. Simplify, simplify, simplify.

Are you a user of the FSA? Have you lost money by not spending your deposits by year end? What do you think of my plan to simplify?

 

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Is Romney the GOP’s Warren Buffet?

As Saturday’s political cartoon Is There a (viable) Republican Candidate? suggested, it seems there’s some anti-Romney sentiment even within the party. When watching this past Friday’s Washington Week with Gwen Ifil, she used the expression “Anti-Romney Rubric” the implication being the party itself might prefer it had another front runner.

Last month, a regular reader and sometime guest poster Elle led me to an article in the New York Times, Two Romneys: Wealthy Man, Thrifty Habits. In this article, the comparison to Warren Buffet seemed clear to Elle and me as well. The article quotes Mitt as saying “Just because you can afford something doesn’t mean you should buy it.” He’s rich, for sure, but he’s not a show off. Not only doesn’t he own a plane, but he shoots for discount fares on Jet Blue as a regular means of travel.

We still have over ten months until election day, and I’m keeping an open mind so far. When comparing the candidates’ plans for the economy, it seems that Romney will seek moderate changes, a bit of tinkering. Others’ plans appear too radical to stand a chance. 9/9/9? Never happen. Ron Paul’s elimination of the individual tax, along with the federal reserve? I can’t see even his own party voting these radical changes into law.

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A 2012 Roundup

I’ve continued to think on this, but I’ve not yet put my 2012 goals in writing. I understand that there are those who believe that writing goals down makes them real and helps form a commitment. At this moment, I’m stuck on my own advice to my 13 year old Jane 2.0, “You can do anything, you just can’t do everything.” So in thinking about what I want for my future self a year from now, I feel I should be specific, but also limit the goals to a short list and focus on just a few important things.

Meanwhile, I’ve been reading my fellow finance bloggers’ goals and would share them with my readers today. First, Free Money Finance posted My 2012 Financial Resolutions. He has 7 goals, which might seem too many to me, but a few are tasks that don’t really take the year to complete. He’ll update his will for one. We need to do the same. Our will was written shortly after our daughter was born. There’s a bit in our will that needs adjusting. During these years, our financial profile has changes along with a number of relationships. FMF offers an interesting list, check it out.

Barbara Friedberg wrote 2012 Foolproof New Years Resolutions (part 1) and (part 2).  Donna wrote “I am convinced, that writing down your short and long term goals, working towards them diligently, and accepting inevitable failures along the way, is the recipe for lifetime achievement.” She’s determined and dedicated, it was my pleasure to meet and talk to her at last year’s FinCon 2011.

One of the goals I know will hit my list is to continue the de-cluttering effort. At Zen Habits, Leo Babauta wrote How to Tackle Your Clutter. Not quite a resolution post, but if decluttering is on your 2012 list, a good read. At times, I ask myself how I’d feel if when I was away for a few days, if I came home to find that Jane had thrown all my stuff out. After the initial shock, I’d probably feel relieved, and I’d not miss much of it. Hmmm. There’s an idea.

Young and Thrifty gave a lookback with 2011 New Years Resolutions- A Year in Review. Interesting to see how tough it is to stick to the new year plan, I don’t feel so bad missing some of my own goals.

At The Centsible Life, Kelly shared her goals in Viva La Resolutions! , spread among Family, Money, Life and Work. A Mom of four, she really seems to have her priorities in order.

And to wrap it up, Financial Samurai’s Predictions for 2012. I read Sam’s predictions and as the year goes on, will hold on to two of them, a 10% rise in the S&P, and Obama’s re-election. We’ll see. 10% would be great, Sam.

By the way, not one of my fellow bloggers is prediction the end of the world this year.  I consulted my ‘made in Jersey Magic 8 Ball and when asked if the end was near, the response was “fuggettaboutit.”

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Is There a (viable) Republican Candidate?

From what I’ve read about Mitt Romney, I think he’s a good person (more on that in an upcoming post) but is he a viable candidate? This will be a tough race for the GOP.

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Happy New Year 2012

Another year has passed. Later this week, I’ll have my goals for the new year to share, but for now, I’ll just take this moment to wish all my readers and fellow Personal Finance Bloggers a Happy, Healthy New Year.

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