Editorial

First ripples of healthcare reform reach shore

Friday, October 29, 2010

Work hard and save some money for a rainy day.

Good advice, no?

No, according to government health care reform.

The first ripple of the wave of change is hitting the shore in the form of changes to Flexible Spending Accounts, a popular, sensible system that lets you pay, pre-tax, for medical expenses not covered by your health insurance. It's a great deal for employees who want to plan ahead.

But in the interest of implementing the new system, the government is taking away the advantages of doing so.

Starting next year, if you want to use your pre-tax money to buy over-the-counter drugs, you will need a doctor's prescription. That's more paperwork for the doctor's office, which will feel pressure to raise prices to cover the costs, and more hassle for you.

You might even opt to take a more expensive prescription drug, billing your health insurance company, which will pass the cost on to you and other customers.

But it will get worse. Starting Jan. 1, 2013, the maximum allowance of a health FSA will be cut in half, down from $5,000 to $2,500, which means it won't be hard to go over the maximum each year.

And that's only the tip of the iceberg. After 2014, if you refuse to buy health insurance, you'll be fined $95 a year. The penalty will be phased in over three years, until not having health insurance will cost you $695 a year up to a maximum of $2,085 for a family.

Assuming, of course, Tuesday's election, followed by the 2012 election, doesn't change things.

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