As with all the other predictable consequences of Obamacare, critics of the law pointed out that changes to FSA regulations—Flexible Spending Accounts— would cause problems for families who used the accounts for health expenses not necessarily entirely covered by insurance, such as eyewear, orthodontics, and private school or tutoring for children with special needs.
An FSA allows families to put away a certain amount of pre-tax dollars each year, with the stipulation that whatever is unspent is forfeited. They used to be allowed to spend those dollars on all kinds of health-related over-the-counter items until Obamacare’s passage set stricter rules. Before Obamacare, there was no government-imposed limit on contributions to an FSA, though there were sometimes limits set by employers. Obamacare mandates that no one can contribute more than $2,500 a year. On paper, this did two things Democrats love— take away a consumer choice and raise money to offset the cost of Obamacare.
Before the new rule, there was no official cap on how much taxpayers could stash into the account, though many companies typically set their own limits of $5,000. For a person in the 25 percent tax bracket, the cap cuts the maximum tax break in half to $625 from $1,250.
For families who relied on the accounts to help them cover the costs of pricey medical services like braces, the cap indirectly raises their costs, says Gayle Glenn, president of the American Association of Orthodontists, which along with some other medical groups is calling for the cap to be eliminated. About 65 percent of the roughly 17,000 orthodontists surveyed by the association in 2009 said their patients used FSAs to pay for treatment.
And with the cost of braces ranging from $5,000 to $7,000, many families are likely max out their FSA contributions to pay for them, says Glenn, whose association recently circulated a letter for orthodontists to publish in their local newspapers, encouraging people to write to Congress to challenge the cap. “We want people to be aware,” says Glenn.
On the upside for FSA users, the federal government did away with the forfeit rule, so funds of up to $500 can now roll over from year to year. Aren’t they generous with the way they let you keep fractions of fractions of your money? Frankly, at this point, FSA rules change so frequently and are so burdensome, they’ve been rendered more work than they’re worth for all but the most dedicated users. And again, Democrat rejoice. People like Yesha Callahan clearly didn’t know what was good for them.
Eventually we made our way to the orthodontist, and thankfully the price for a 2 year treatment wasn’t as bad as I thought it would be. My dental insurance was able to negotiate a price that turned out to be half of what the orthodontist initially quoted me. On the day of service I ended up paying only $1700 for braces and follow up appointments.
So braces were a done deal.
Let’s also calculate the several emergency room visits, the 4 day stay at Johns Hopkins because of his asthma issues, as well as prescription costs. All of this was before I found out my son needed glasses.
If I hadn’t set up my FSA, I truly don’t know how much credit card debit I would have possibly ran up because of the bills and co-pays we amassed over the past year.
Obamacare advocates will argue that pediatric dental and vision coverage were made totally better by the “essential health benefits” package Obamacare mandates, but a) those benefit definitions differ by state, so it’s hard to which families will see a net benefit after being robbed of their old option and b) many people are finding those plans more expensive and less attractive than their former options. And, you can’t access them on the exchange anyway, so it doesn’t matter a whole lot.
Hey, but I’m sure none of the families who need braces for multiple kids and glasses to go with them are in the middle class or struggling. And, I’m sure all the families who used FSA funds for their special-needs children will be comforted by their months-long wait times in a health care exchange where they can’t even pay for their policies. We knew all this four years ago, but reassuring Obamacare claims that were “half-true” back then have a way of becoming recognized as big ol’ lies lately. It’s worth reminding ourselves of them.