New Healthcare Fllexible Spending Account Rules for 2013

Along with the new Obama led healthcare reform come many changes that are going to be confusing and complex. One of the big changes is how these new rules are going to affect the flexible spending account rules. There are some new healthcare flexible spending account rules for 2013 that the public will need to be aware of. Little by little, these new healthcare changes are seeping into the public domain.

Non-prescription medications using the FSA

Not anyone having a flexible spending account or FSA will be able to use any of this money to purchase non-prescription medications. Prescribed insulin will be the only medication exception. If there is money left in an FSA account from 2012, the employee will not be able to use these left over funds after the first of the year for this purpose. It is all right to use FSA funds for non-prescription medications if the primary doctor writes a prescription.

In order to get money back from an FSA account, the employee will have to submit the prescription and a receipt with the Rx number to the provider. Purchases made with FSA funds for non-prescription medications without following these rules the employee will have to pay an additional 20 percent tax added to the gross income.

FSAs and adult children

In the past FSA account, rules were very lenient with adult children. Now employers have redefined the definition of adult children as any adult child under the age of 27 at year’s end. You do not have to claim them as a dependent, nor must the adult child live at home. An employee must find out which family members are eligible to use FSA money. Some of the new rules for adult children are already in place.

The limits are going to be lower on FSA accounts

The maximum limits of FSA accounts in 2013 will be $2,500. Previously, employers set caps on FSA accounts of $5,000. Many employees are trying to accumulate more tax-free money in their FSA account before 2013 comes to help pay for upcoming expensive medical needs. Employers need to let employees know what the company is planning to do.

Do not lose FSA funds

The company may decide to the grace period until March 15, or two months and 15 days after the new plan starts, giving employees a chance to use the FSA funds from the previous year. Doing it this way will allow employees to use this money and the current $2,500 allowed for the 2013 year. Employees can consider this at least a $1,000 in savings.

The rule that says if FSA funds are not used up by year’s end the employee will lose that money. Check with your employer to see if the company offers a grace period for two months and 15 days after the new plan starts. This rule discourages employees from wasting FSA funds.

The Treasury Department continues working on a solution on this old rule of use it or lose it. Lawmakers feel that because of the new lower cap of $2,500 this old lose it law would be better if eliminated. Another thought demanding consideration is to allow employees to take $500.00 of the funds, taxable use. The Treasury Department has come to no solutions yet. Employees may have to wait another year until 2014.

Legally sidestepping FSA caps for 2013

There are legal ways to get around this $2,500 limit on FSA accounts. If both husband and wife work, each can take advantage of the cap of $2,500 in each account. If both or one works a second job with two different employers or the same employer, they can set up two different FSA accounts. Some employers offer what a flex credit plan. This credit offered by employers is usually around $500.00. This $500.00 does not count against the $2,500 cap.