Families with special-needs children and people with chronic illnesses stand to lose hundreds, if not thousands, of dollars in tax benefits under proposed health care reform legislation, critics say, warning that a plan to cap the amount of money people can put into special "flexible spending" health accounts will have "cruel" and "unintended consequences."Recall back in 1995 when the GOP attempted to slow the rate of increase for the wasteful school lunch program. For months on end all we heard from the media and the left was that Republicans wanted to "starve" children. And that was with funds to the program actually increasing.
The Senate and House health care bills both include a revenue-raising provision that would cap at $2,500 the amount of money workers can put into flexible spending accounts. The accounts, used by millions, allow workers to store pre-tax dollars to cover out-of-pocket health care expenses during the year.
Many employers set a cap on contributions at about $5,000, according to Save Flexible Spending Plans, a group formed by benefits providers over the summer to lobby against the changes. Federal government workers are subject to a $5,000 limit, and most state governments impose a $3,000-$6,000 cap. But legally there is currently no cap across the board.
The change is projected to bring in about $15 billion over the next decade by limiting the pre-tax dollar savings, but critics say it could have devastating effects on families that rely on flexibile spending accounts to pay for health care expenses that are not covered by their insurance policies.
"It's really become kind of a revenue grab rather than good sound health policy," said Jody Dietel, chief compliance officer for WageWorks, a company that helps administer the accounts. She is also executive director of Save Flexible Spending Plans.
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