Cutting Flex Spending Accounts In Half Worries Families, Doctors

MINNEAPOLIS (WCCO) -- About 35 million Americans have flex spending accounts, which allow them to set aside pre-tax dollars to pay for healthcare costs that aren't covered by insurance.

But as of Jan. 1, 2013, the federal government says the most someone can set aside is $2,500.

Yes, many people are just now signing up for benefits for next year -- and for a lot of consumers, it's a shock.

Doctors fear it could change a lot of people's healthcare decisions.

As healthcare costs have risen, FSAs have become increasingly popular.

Here's why -- if you set aside $5,000 in an FSA, depending on your tax bracket, you could save anywhere from $1,250 to $1,750 a year in taxes. That's money that can go directly to pay for healthcare.

But now, under a new federal cap, you only can save about half that.

Angela Ross, an orthodontist in St. Louis Park, says 70 percent of her 700 patients use FSA to pay their bills.

"It is going to hit people hard," she said.

Ross said she expects families will have to postpone treatments.

"A lot of people are not even aware that it is going to be reduced by $2,500, and as we explain that to them, they are finding that they are having to rethink the timing of their kid's treatment, or even delay treatment on themselves," she said.

Ross' office manager Shelli Kullberg said her husband was planning on LASIK eye surgery.

"I have MS, my son has asthma, so we have lots of doctor appointments and prescriptions," she said. "We are missing out on that other $2,500."

Minnesota Congressman Erik Paulsen has a bill that would restore the cap at $5,000.

"These are provisions that were already law, that were already being used by consumers, and it's only appropriate that it is only fair that we go back to where things were a year ago," he said.

Paulsen's bill would also restore the ability of consumers to use flex spending account dollars to be used on over-the-counter medications, which was taken out of FSAs two years ago.