Download
HTML Embed
HTML EMBED
Click to Copy

Latest Episodes

Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Tech
Download
HTML Embed
HTML EMBED
Click to Copy
Make Me Smart with Kai and Molly
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Ask Money

Flexible spending accounts

Chris Farrell Jul 20, 2010
Share Now on:

Question: Apparently there’s a section in the new health-care reform law that phases out the use of flexible spending accounts. I’ve heard many policy analysts say that FSAs or HSAs are the future of health care, giving people direct control over costs and encouraging them to take responsibility for their own health-care spending. So I don’t understand why the new law downplays FSAs. Is there some special-interest group that would benefit if FSAs were eliminated? Debbie, Cleveland, GA

Answer: A flexible spending account is an employer-sponsored benefit. It allows you to pay for qualified medical expenses with pre-tax dollars.

The pre-tax benefit saves you money but you do need to calculate accurately how much you will spend every year since what you don’t use, you lose. The employer sets the limit on how much their workers can set aside in an FSA with a typical limit of $5,000.

The new health care law doesn’t eliminate the employer benefit. It limits the annual maximum that can be put into an FSA account to $2,500 starting in 2013. For most employees the change doesn’t matter since they don’t put that much aside every year anyway. For instance, according to the Employee Benefits Research Institute the average FSA account was $1,235 in 2005. Another change: You’ll no longer be able to use the account to pay for over-the-counter medicines that aren’t prescribed by your doctor.

If you’re a member of your local public radio station, we thank you — because your support helps those stations keep programs like Marketplace on the air.  But for Marketplace to continue to grow, we need additional investment from those who care most about what we do: superfans like you.

Your donation — as little as $5 — helps us create more content that matters to you and your community, and to reach more people where they are – whether that’s radio, podcasts or online.

When you contribute directly to Marketplace, you become a partner in that mission: someone who understands that when we all get smarter, everybody wins.