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Salt Life
More from ObamaCare. 
New Healthcare Flexible Spending Account Rules For 2013, Use-It-Or Lose-It Still Undecided - Forbes
Millions of employees are making benefit choices for 2013 now, including how much of their salary to put into a healthcare flexible spending account, and they’re facing new rules thanks to ObamaCare. Here’s help.
Give Yourself A Raise. Under ObamaCare, starting with the 2013 plan year (Jan. 1, 2013 for most employees), there is a new $2,500 cap on healthcare flexible spending accounts. Employees divert pre-tax salary into these accounts to cover out-of-pocket healthcare expenses like co-pays, deductibles, orthodontia and fertility treatment. In the past, there was no statutory cap on these accounts, although most employers set caps of $5,000.
“In easier economic times, many people said, ‘It’s not worth it,’ but this is an opportunity to give yourself a raise,” says Jody Dietel, chief compliance officer with the employee benefits administrator WageWorks. If you divert $2,500 and your combined federal/state income tax rate is 40%, that’s $1,000 in savings.
Beating the New $2,500 Limit. There are two ways you can get around the new $2,500 cap. If you hold two or more jobs (with unrelated employers), you can elect up to $2,500 under each employer’s FSA plan. The other way is if you’re married and you both work for employers that provide FSAs. Each of two spouses can elect up to $2,500, for a total $5,000–even if they work for the same employer.
If you work for an employer that offers “flex credits”—typically $500 of employer money you can use towards various benefits—that employer money that goes into your FSA doesn’t count against the $2,500 limit. Exception: if the employer gives the employee the option of receiving the flex credit as cash.
Also note: The new cap is indexed for inflation, which will provide some relief in future years, but not total relief if the rise in healthcare costs continues to beat inflation.
What’s covered?
WageWorks has a complete list of what’s covered from acupuncture to x-rays (and examples of what’s not covered like tampons) here. Since Jan. 1, 2011, over-the–counter items haven’t been covered unless you get a letter of medical necessity from your doctor, or a note on a prescription pad for an Rx item.
Be careful if you have a health savings account, another tax-favored healthcare account typically used in conjunction with a high deductible plan. Then your flexible spending account is limited to covering dental and vision expenses. The thinking is you already got a big tax benefit by socking away pre-tax dollars for healthcare spending in the health savings account.
Use-It-Or-Lose-It. The dreaded use-it-or-lose-it rule says that dollars left in FSAs at the end of the plan year are forfeited. (Some employers allow a grace period of 2 months and 15 days after the plan year to use up the money.) The rule encourages wasteful spending – buying another pair of prescription sunglasses to use up FSA money. And it discourages employees from using the accounts in the first place for fear of leaving money on the table. Unused dollars exceed $500 for more than 20% of those forfeiting FSA money (40% of participants forfeit at least $1), according to the Employers Council On Flexible Compensation.
Last summer the Treasury Department asked for comments on fixes to—or outright elimination of–the use-it-or-lose-it rule in light of the new $2,500 cap. One idea is to allow rollovers of unused money; another idea is to allow employees to take $500 (taxable) cash out. Unfortunately, there’s been no word from Treasury in time for the current open enrollment period. “It’s a waiting game,” says Dietel. So it’s yet another year of frustration for FSA users.
New Healthcare Flexible Spending Account Rules For 2013, Use-It-Or Lose-It Still Undecided - Forbes
Millions of employees are making benefit choices for 2013 now, including how much of their salary to put into a healthcare flexible spending account, and they’re facing new rules thanks to ObamaCare. Here’s help.
Give Yourself A Raise. Under ObamaCare, starting with the 2013 plan year (Jan. 1, 2013 for most employees), there is a new $2,500 cap on healthcare flexible spending accounts. Employees divert pre-tax salary into these accounts to cover out-of-pocket healthcare expenses like co-pays, deductibles, orthodontia and fertility treatment. In the past, there was no statutory cap on these accounts, although most employers set caps of $5,000.
“In easier economic times, many people said, ‘It’s not worth it,’ but this is an opportunity to give yourself a raise,” says Jody Dietel, chief compliance officer with the employee benefits administrator WageWorks. If you divert $2,500 and your combined federal/state income tax rate is 40%, that’s $1,000 in savings.
Beating the New $2,500 Limit. There are two ways you can get around the new $2,500 cap. If you hold two or more jobs (with unrelated employers), you can elect up to $2,500 under each employer’s FSA plan. The other way is if you’re married and you both work for employers that provide FSAs. Each of two spouses can elect up to $2,500, for a total $5,000–even if they work for the same employer.
If you work for an employer that offers “flex credits”—typically $500 of employer money you can use towards various benefits—that employer money that goes into your FSA doesn’t count against the $2,500 limit. Exception: if the employer gives the employee the option of receiving the flex credit as cash.
Also note: The new cap is indexed for inflation, which will provide some relief in future years, but not total relief if the rise in healthcare costs continues to beat inflation.
What’s covered?
WageWorks has a complete list of what’s covered from acupuncture to x-rays (and examples of what’s not covered like tampons) here. Since Jan. 1, 2011, over-the–counter items haven’t been covered unless you get a letter of medical necessity from your doctor, or a note on a prescription pad for an Rx item.
Be careful if you have a health savings account, another tax-favored healthcare account typically used in conjunction with a high deductible plan. Then your flexible spending account is limited to covering dental and vision expenses. The thinking is you already got a big tax benefit by socking away pre-tax dollars for healthcare spending in the health savings account.
Use-It-Or-Lose-It. The dreaded use-it-or-lose-it rule says that dollars left in FSAs at the end of the plan year are forfeited. (Some employers allow a grace period of 2 months and 15 days after the plan year to use up the money.) The rule encourages wasteful spending – buying another pair of prescription sunglasses to use up FSA money. And it discourages employees from using the accounts in the first place for fear of leaving money on the table. Unused dollars exceed $500 for more than 20% of those forfeiting FSA money (40% of participants forfeit at least $1), according to the Employers Council On Flexible Compensation.
Last summer the Treasury Department asked for comments on fixes to—or outright elimination of–the use-it-or-lose-it rule in light of the new $2,500 cap. One idea is to allow rollovers of unused money; another idea is to allow employees to take $500 (taxable) cash out. Unfortunately, there’s been no word from Treasury in time for the current open enrollment period. “It’s a waiting game,” says Dietel. So it’s yet another year of frustration for FSA users.
For anyone considering an FSA (and now especially with the limit), it's very important to estimate expenses. It's hard to tell just how much you'll be spending, but try to calculate it as best you can. I have an FSA and have always been able to use up all the money before end of year. I found a calculator to just plug in all my 