Tax break is one piece of good healthcare news
And then there's Obamacare.
What I'm talking about is running the annual gantlet of signing up for the company healthcare plan. For all the problems popping up at HealthCare.gov, at least we know what the darn thing is called -- my benefits department couldn't even tell me the name of my insurance website.
Fortunately, I got the necessary information from our pals at the NSA.
No tax break for you, baldy
One piece of good healthcare news from Washington is that the IRS is loosening the "use it or lose it" rule on medical flexible spending accounts. Employers that offer FSAs allow you to put up to $2,500 into an account that can be used to pay for qualified medical expenses -- tax free.
Eligible spending ranges from antihistamines to X-rays, but doesn't cover things like unprescribed over-the-counter medicines, hair transplants, dental floss or the medieval practice where doctors bore a small opening into the skull to expose the outer membrane of the brain. I believe that's because anyone who's already endured the stupefying hassle of signing up for corporate health benefits already feels like they've got a hole in their head.
The Employee Benefits Research Institute says the average FSA contribution in 2005 was $1,235, which would cut a single worker's federal tax bill by $282, plus any savings on state taxes.
There's been just one stumbling block with an FSA: You forfeit any money still left in your account at the end of the year.
Details, details, detailzzzzz
Usually, that balance is only $34, according to Meritain Health in Minneapolis. Risking $34 to save at least $282 is a good deal, but that deal just got better. Now the IRS will allow workers to roll over up to $500 from one year's FSA to the other, if the employer allows it. Employers also can give you an extra two and a half months into the next year to spend the cash, but can't offer both options.
For most workers, that makes a flexible spending account risk free. Since open enrollment periods for workplace health plans are wrapping up, check your last year of medical spending and estimate what you're likely to use next year.
If you get paid every two weeks, contributing $1,235 means you'd put $47.50 into your account, but your after-tax take-home pay would shrink by less than $37.
That wraps up our detailed discussion of the minutiae of healthcare insurance and related tax issues, so wake up, enroll in a flexible spending account and you may even be able to deduct the cost of this newspaper.
That's right -- in some cases, your FSA even covers sleep aids.
(Brian J. O'Connor is an award-winning columnist for The Detroit News. Contact him at email@example.com or visit http://www.funnymoneyblog.com.)
(c) 2013 TRIBUNE CONTENT AGENCY, LLC.