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Flexible Spending Accounts — Tax Free Loans Sponsored by Employers

Editor’s note: In addition to the issues mentioned below, the reduction of health flexible spending accounts hurt low wage earners. The way in which these accounts are structured, employees my withdraw all their funds at any point during the year beginning January 1st of the new year. So if they incur the medical expense in the first week of the year they can take all of their money as soon as they are billed. In effect, these are interest free loans that are paid for by their employers, not the government. These are benefits that employers give to their workers. These are items available to all employees, but disproportionately assist low wage earners as they have less disposable income with which to deal with unexpected expenses.

Reform bills cap flexible spending account contributions
Employee tax-free contributions to flexible spending accounts would be capped at $2,500 a year under health reform bills in the Senate and House, to raise an estimated $13 billion over 10 years to help pay for health care reform. A coalition of insurers, businesses and others — called the Save Flexible Spending Plans — is trying to stop the change, saying it would tax the middle class and hurt chronic disease patients. Yahoo!/The Associated Press

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November 2, 2009 - Posted by | Federal Government, healthcare | ,

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