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The Public Policy
Obamacare Sequesters Your Flex Account
How to minimize the damage from Obamacare’s stealth tax hikes.
Attention Joe and Jane Citizen! Concerned about the fiscal future of your country and your family? Then please step away for five minutes from the nonstop TV coverage of the Super Committee breakdown, and get information about a matter much more important to your country and your family’s prosperity.
You are being told that because the House-Senate Joint Select Committee on Deficit Reduction, created last August as a compromise in the debt ceiling fight, failed to reach a “solution” by Thanksgiving, there will be dire consequences as government spending has to be “sequestered” from the budget in 2013. But the real worry you should have about 2013 is the permanent sequestration of the money you can contribute to your flexible spending account due to the stealth tax hikes of Obamacare.
Back in 2010 when she was Speaker of the House, Rep. Nancy Pelosi said Congress had to pass the health care bill into law, so the public could know what’s in it. And it won’t be until the beginning of 2013 that most of the public will know that one of the things in the bill was a tax-free dollars that can be put aside for medical expenses in a flex account to just $2,500 per year. Especially for large families, this is in effect a marginal tax hike on health expenses of as much as 40 percent!
The flex account limits is one of the gimmicky “revenue enhancements” that allows Obamacare supporters to say it reduces the deficit. Other accounting tricks include the now-repealed 1099 mandate, which required firms to report to send a form to the IRS every time they bought a good or service valued at $600 or more.
The “medicine cabinet tax,” which went into effect earlier this year and applies to both flex accounts and health savings accounts, puts in the additional headache of getting a prescription for every over-the-counter medicine bought with the account. But any short-term tax savings will almost certainly end up resulting in higher costs in the long run, as more patients needlessly visit the doctor for OTC prescription or just buy more expensive prescription medications.
But the flex attack that will begin in 2013, after the next election, of course, will potentially be Obamacare’s most devastating tax hike, or “revenue enhancement.” All families, no matter their income or number of children, will be capped at putting $2,500 in their flex accounts. However, it will hit those families with disabled children the hardest.
“Families with special-needs children and people with chronic illnesses stand to lose hundreds, if not thousands, of dollars in tax benefits,” reports FoxNews.com. The article notes that “policy groups estimate that people with chronic illnesses face more than $4,000 annually in out-of-pocket expenses. Flex account money can go toward that.”
The semi-good news is that depending on your and your family’s needs, there are things you can do to minimize this hit. But you have to take action in the next couple weeks, and plan your 2012 flex accounts accordingly.
Consider putting in higher than normal amounts in the flex accounts for 2012, even doubling or tripling the amount. Then, to the extent you can, get certain procedures done this year and pay upfront for multiyear treatments such as your children’s braces before the cap hits in 2013.
If you’re thinking about laser eye surgery, which often isn’t covered by insurance, you have a strong case for getting it done in 2012. If you know your kids are getting braces that they will wear for two or three years, pay more of the cost upfront in 2012, before the $2,500 cap hits in 2013.
Your orthodontist or doctor’s office will usually be cooperative in helping you take care of the costs earlier, and they often like to get paid earlier, anyway. And remember, at the beginning of the year, all of the flex deductions that will be taken for the year are loaded onto your card. That means you can use the card to for the entire year’s worth of your flex account starting at the beginning of January, even though the amount is deducted from your account paycheck-to-paycheck over twelve months.
Even if you have some money left over in next year’s account, you can use it for things like extra pairs of glasses. And isn’t even ten pairs of glasses better than your money going into federal coffers to fund bureaucracies such as Obamacare’s Independent Payment Advisory Board (IPAB), which have the purpose of rationing your future care?!
You can also support legislation that repeals this tax attack on flex accounts publicized on the website SaveMyFlexPlan.org.
So this Thanksgiving, enjoy your turkey and stuffing, give thanks for living in the freest country on Earth, and resolve to keep it that way. Don’t get taken in by the doom-and-gloom news reports of the Super Committee’s failure to, as Matt Patterson put it here on OpenMarket, put a Dixie cup of water on the bloated government fire. Instead, focus on slaying the real dragons like Obamacare, and while they are here, shielding your family from them as best you can.
For your country and your family’s sake, don’t give a dime more of your tax dollars to the edifice of Obamacare than you are legally required to.
(Since individual circumstances vary, please consult your tax or financial adviser on the personal recommendations in this column.)
About the Author
John Berlau is Senior Fellow for Finance and Access to Capital at the Competitive Enterprise Institute and blogs at OpenMarket.org.
Letter to the Editor View all comments (15) | Leave a comment
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dnha14| 11.23.11 @ 8:44AM
Please have an editor review the articles prior to posting. The missing words and the incomplete sentences are embarrassing.
dc| 11.23.11 @ 3:34PM
I'm sure you apply the same standards to Maobama's and his beeatch Moochelle's speeches, right? Does anyone edit those for outright lies, obfuscations, the distinctions between "corpse-man" and corpsman, the number of U.S. states, etc.?
No, the article isn't the finest example of advocacy prose I've ever seen. But it does a fair job of raising an alarm about yet another socialist assault upon private property (your money), and there's value in that. What value does your comment add?
Timothy L. Pennell| 11.23.11 @ 8:50AM
Look. The way I see it? The only way we can survive all of these things, is to GET RID of Obama. Frankly, I'm STUNNED, that the SOB is still there.
He's obviously, not one of us. He might have been BORN in Hawaii, but he's definitely NOT an American. He has NEVER shown that he possesses even one iota of love for this Country. If anything, he hates this Country. Hates our Founders and our Founding Documents. Hates our Economic Systems. Hates our Form of Government. He is on a MISSION to bring this Country down. Even a Blind Man can see that.
My prediction? Someone in the Secret Service will STEP UP. When Obama's Leftist Brown Shirts begin Burning our Cities, next year, someone in the Secret Service will forget what his JOB is, and remember what his OATH is.
"I (state your name) swear to faithfully Protect and Defend the Constitution of the United States of America, from all Enemies, both Foreign and DOMESTIC.
It will soon become apparent, that the DOMESTIC ENEMY, is right in front of him. And, he will DO HIS DUTY. He will be true to his OATH. Remember. This is just a prediction.
In "Operation Valkyrie", a group of High Ranking German Officers, carried out a Plot, to KILL Adolph Hitler. They risks everything, for the sake of their Country, and it's people. Imagine if they had succeeded. Imagine if they had done this BEFORE he plunged the World in to WAR?
Think of the lives that could have been saved, if someone close to MAO, had stepped up? If someone close to Kim Jung Il, had stopped him, before he could STARVE his own people to death. Or, Pol Pot. Or, Stalin. Or, Castro.
In Ancient ROME, the Emperor had his own, Secret Service. The Praetorian Guard. They were Elite Centurions, and their JOB was to Protect the Emperor. A JOB they took very seriously. But, that JOB, did not prevent them from REMOVING any Emperor who Threatened the EMPIRE. Caligula. Nero. And, there were others.
You see, their JOB was to Protect The Emperor. But, their ALLEGIENCE was to THE EMPIRE. They obeyed their OATH. The Empire went on.
Now, I'm not ADVOCATING anything. I'm not even SUGGESTING anything. I'm just putting it out there. I'm just utilizing my FREE SPEECH.
While I still can.
Wayne| 11.23.11 @ 7:16PM
Being here in Hawaii I was surprised how unHawaiian he is. From aloha shirts, to Hawaiian words part of the common conversation to the use of shaka or hang lose sign. He has none of it. Instead he managed to piss people off by closing resorts and highways for his convenience and of course the fund raiser for those crony capitalists.
On a side not: Abercromie is apparently the least popular governor in the country. The former hippie and perpetual college student who hated technology is now trying to push technology and the socialist is cutting Medicaid. Its a strange world we live in.
Buck Ofama| 11.24.11 @ 2:28AM
I DETEST this despicable loathsome muslim C0CKSUCKER, Ovomit. I wish someone would put us out of our misery. Maybe Newt or ????
WRTolkas| 11.24.11 @ 9:27PM
Dear Mr. Pennell,
The Patriot SS agent will need a silver bullet.
PJ| 11.23.11 @ 8:51AM
"Consider putting in higher than normal amounts in the flex accounts for 2012, even doubling or tripling the amount.... and pay upfront for multiyear treatments such as your children's braces before the cap hits in 2013."
That's exactly what I'm going to do & it's such a shame!
The original intent of the flex or health savings accts were to pay the premiums, deductibles, & other health expenses the insurance may not cover. To get the same tax break for 1 yr, I have to spend frivolously on expenses that should have rightfully been postponed. For example, an extra, extra set of eyeglasses or that non-life threatening knee surgery that I wanted to wait for a couple of yrs instead of being forced to get it done by the end of 2012.
Denver Todd| 11.23.11 @ 10:30AM
Many employers, mine included, simply did away with flex account coverage for OTC, even with a prescription. This eliminated the one outlet for use-it-or-lose-it that we had at the end of the year.
Ted| 11.23.11 @ 12:15PM
We should do away with the FSA anyhow with its $5,000 per annum cap. People should be allowed to save a certain amount per year that is not affected by any use or lose rule; in effect it would be an Health Savings Account (HSA) in which you can save money for health care expenses.
Dave| 11.23.11 @ 5:49PM
Wow.
When will the people stand up and revolt, whether through votes or through force of arms?
Buck Ofama| 11.24.11 @ 2:29AM
>through force of arms?
I like it. Where can I get a golden pitchfork?
POST American| 11.26.11 @ 1:34AM
----BTW, speaking of 'health'
statistics and graphs UNDENIABLY
link the barrages of injections on the
young -----with AUTISM
AND we're going into our 12th year
of aggressive CHEM-trailing of our skies
with BARIUM/ CADMIUM and ALUMINUM
oxides (ie sterility, cancer and A;zheimers)
AND the FUKISHIMA world depop op
media cover-up is going into its 10th month
AND Monsanto is now CON-solidating
its genetic co-opting of our enviornment
with cancer engendering, organ and fertility
destroying GMO food
--------------AND A WHOLE LOT MORE.
---------------HUAC/ Nuremberg 2012----------------
RonRonDoRon| 11.26.11 @ 3:45PM
We're all going to die!
That was useful.
chaussures converse | 3.31.12 @ 6:17AM
amazing.