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> 1. Health insurance, but not treatment, is fully tax deductible. So if you buy your own penicillin, it's with after tax money, but if your insurance company b
by anamax 16y ago
> 1. Health insurance, but not treatment, is fully tax deductible. So if you buy your own penicillin, it's with after tax money, but if your insurance company buys it, it's pre-tax money. That's one of the reasons that health insurance is so widespred in America even for routine medicine like antibiotics and checkups. That's a major contributing factor in why the administrative costs are so high.
That's not completely true - someone else mentioned Health Savings Accounts.
There are also flex spending accounts, which are tax deductible. However, you only get to change the Flex Spending amount once a year or when you change jobs, get married, divorced, or have children (and possibly a couple of other events). That's okay for chronic problems and other things that you can plan for, but not so good for unexpected events.
Under previous law, there was no legal limit on flex spending accounts. Obama care limits them to $4k.
- camiller 16y ago>Under previous law, there was no legal limit on flex spending accounts. Obama care limits them to $4k. Maybe in that last sentence your confusing HSA with FSA? Under previous law there was/is a $5,000 limit on Flex accounts. As far as I know that limit is not changing (I'll find out for sure in December when renewal time comes around) however Obama care will no longer let you use a Flex account to buy over the counter medicine like ibuprofen without a prescription (starting Jan 1, 2011), band-aids are still OK. Edit: Upon further research I can definitely say with certainty that I have no idea what the hell will happen next year. I've spent the last thirty min trying to trace through http://docs.house.gov/energycommerce/ppacacon.pdf http://docs.house.gov/energycommerce/ppacacon.pdf and the US Code to figure out what the changes to FSA's are and am getting nowhere. wikipedia suggests that the limit will actually drop to $2,500 in 2013 rather than the $4,000 next year suggested by anamax. I'm going to have to spend a lot more time on this.
- anamax 16y agoAccording to http://www.irs.gov/publications/p969/ar02.html#en_US_publink1000204180 http://www.irs.gov/publications/p969/ar02.html#en_US_publink... , there is currently no statutory limit on FSA (Flex Spending Accounts) contributions although every plan must impose a limit. In other words, your plan can impose a $1M limit today. I'm still trying to track down how Obamacare changes that.