Cafeteria plans - Flexible Spending & Dependant Care Cap - $2,500 (salary, premium)

[Danno3314]

Flex spending accounts face hit in health overhaul - Yahoo! News (http://news.yahoo.com/s/ap/20091101/ap_on_bi_ge/us_health_overhaul_flexible_spending - broken link)

I don't know if many of you are familiar with this type of add on some companies offer to their employees. There are a bunch of different companies that offer it....it's not that expensive but, then it also depends on how many "credit dollars" wants to give you to spend too (I'll explain "credit Dollars" shortly). The most popular company that offers it, is AFLAC. Your employer lets you choose what additional coverage from a list (life insurance 1X, 2X or 3X your annual salary, cancer policy, accident policy, short-term disability, long term disability, etc....). You can usually change it once a year. You're given a specific amount of "credit dollars" depending upon whether you're single or married/family and each type of additional coverage has an amount in credit dollars that it will cost.

First you check off the health insurance (the biggest amount of credit dollars, by far) and then most want dental but, you'll still have plenty of credit dollars left usually. A lot of the other stuff uses very few. The great part of it though is the Flex Spending or the Dependent Care accounts that also come with it. What ever you have left over you can assign to either one. You can buy pretty much anything medical related, send in the receipt and you get reimbursed at 100% until you use how ever much left over credit dollars you had assigned to it. January 1, it gets replenished...you can use it all January 2 if you want....you don't have to wait for it to build up each month. If you leave your job on January 3, you don't have to play any of it back....also whatever you don't use by December 31, you lose (but it's not your money any way). Dependent Care account works the same way but, you can use it to pay for day care.

What happens sometimes is that both husband & wife have jobs that offer full coverage to them and their family for sometimes very little or no deduction from your weekly pay. If that's the case and one of you has something like AFLAC at your job, you can use most if not all of your credit dollars for your Flex or Dependent Care account (instead of wasting it on double coverage which does you no good). You can't get more than 100% of what you claim is any way (it's against the law). It's called co-ordination of benefit...one insurer is the primary payer and the other gets to pay little or nothing in some cases of the claim you submit.

By putting a cap on what you can assign to those accounts, you would still have a bunch of dollars that you have to assign to something. Usually if you have any left-over you just assign it to Flex or Dependent Care. Now you're going to have to go back and take health insurance and dental probably too so, you can use up your credit dollars and you'll be putting very little at that point into the Flex or Dependent Care which could have really helped (since you both work and very likely pay some day care out of pocket).

It won't help a family with both spouses working like it does now. Basically what the government is doing is making sure that money (credit dollars) that your employer gives you, gets used to pay a monthly premium for health insurance that will hardly ever pay any claims (if any) because it's secondary coverage.

If any families have been fortunate enough to have employers that provide this to them, up until now if they have any kids in day care, they haven't had to pay for it each week for each child because the Dependent Care account has been paying it, in lieu of not taking any health insurance....double coverage (since your spouse covers you and the family on their plan). This could be a lot of money each month now if the children aren't in school yet and both parents work during the day. If they only paid $100/week and they had two kids, that's $800/month.....a $9,600 annual expense that most or all of was getting taken care of. In this example (which is just an example), with the cap at $2,500, they would have to start paying $7,100 extra towards day care that they weren't paying (again that's just an example to explain the math).

I didn't read anything any where about it effecting the Dependent Care account (just the Flex) but, usually those two things go hand in hand....they're considered the same.

This is the same as paying a penalty if you opt out of insurance. The money being paid in penalties, is money that helps fund the system with no claims being filed against it (because it's penalties and not premiums paying for insurance, that people submit claim to). Having the cap, will force some to take wasted double coverage, providing funding for the system with no claims being filed against it.

Could you imagine if people had to pay had to pay penalties now for not having coverage....all that extra money would get divided up among the private insurers to reduce the rates for everyone else. Doesn't sound right but, that's what's going to happen but, the private insurers aren't going to be around....the government option will get all of it.....insurers can't do that now.....insurers can't force you to pay a penalty if you don't buy insurance from them (or one of their competitors).

A 2,000 page bill that's going to have surprises in it like this, that people aren't even talking about....or realize exists (because they've never had it from an employer but, may in the future). 2,000 pages is a lot of pages to hide all kinds of surprises in....especially if nobody reads it (or doesn't have enough time to before they have to vote on it)....or worse if they get no final draft to read at all.