Obamacare: IRS Squeezes $13 Billion from Americans' Health Spending Accounts
The 30-35 million Americans who use a pre-tax Flexible Spending Account (FSA) at work to pay for their family's basic medical needs face a new Obamacare cap of $2,500. This will squeeze $13 billion of tax money from Americans over the next ten years. (Before Obamacare, the accounts were unlimited under federal law, though employers were allowed to set a cap.)
Now, a parent looking to sock away extra money to pay for their family's medical needs will find themselves quickly hitting this new cap, meaning they would have to pony up some or all of the cost with after-tax dollars.
Obamacare imposes, for the first time, a $2,500 cap on annual workplace flex account (FSA) deferrals. There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children.
There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education.
Americans for Tax Reform is a non-partisan coalition of taxpayers and taxpayer groups who oppose all tax increases.
Throughout the summer, Americans for Tax Reform will be highlighting the most outrageous new powers that the IRS will have under the Obamacare law. According to a report from GAO, the IRS is tasked with nearly four dozen new powers under that law.
Editor's Add-On: IRS Chief Daniel Werfel testified this week that he'd rather keep his current health plan than go into an Obamacare exchange.