Tax scratch fever
December 16, 2009 12:22 AM Subscribe
USOpenEnrollmentFilter. Question about "health savings accounts" versus medical FSAs (flexible spending accounts).
So, for years I used a medical FSA to pay for out-of-pocket medical expenses. My employer has switched to a "health savings account" program, and has phased out the medical FSA.
The problem is that the health savings account has an IRS cap of $3,050 annually for 2010. Our health coverage for 2010 has a $2,500 deductible (which the employer funds by putting the money into the health savings account, and then the employee e.g. me, I add money to hit the $3,050 cap), with the possibility of $1,500 more out-of-pocket following the meeting of the deductible.
So there's really only $550 at best for out-of-pocket costs. I have much more in out-of-pocket costs than $550 during a regular year in dental, glasses, alone. (The medical FSA does not have an IRS cap so I haven't faced this problem earlier.)
Is there anything a person can do? It seems as though a person generally cannot have a medical FSA if they already have a health savings account, so I don't think I can go out and try to get an individual medical FSA. (Which is what I really want because no limit -- some people don't like them because they are "use it or lose it," but that is not a problem for me. So if I'm wrong about that please tell me!)
Could you declare on your income tax all of your medical expenses (including those covered by the health savings account), take a tax deduction, and somehow "back out" the savings you already got through the health savings account? Would that even work?
I feel a little frustrated ...
So, for years I used a medical FSA to pay for out-of-pocket medical expenses. My employer has switched to a "health savings account" program, and has phased out the medical FSA.
The problem is that the health savings account has an IRS cap of $3,050 annually for 2010. Our health coverage for 2010 has a $2,500 deductible (which the employer funds by putting the money into the health savings account, and then the employee e.g. me, I add money to hit the $3,050 cap), with the possibility of $1,500 more out-of-pocket following the meeting of the deductible.
So there's really only $550 at best for out-of-pocket costs. I have much more in out-of-pocket costs than $550 during a regular year in dental, glasses, alone. (The medical FSA does not have an IRS cap so I haven't faced this problem earlier.)
Is there anything a person can do? It seems as though a person generally cannot have a medical FSA if they already have a health savings account, so I don't think I can go out and try to get an individual medical FSA. (Which is what I really want because no limit -- some people don't like them because they are "use it or lose it," but that is not a problem for me. So if I'm wrong about that please tell me!)
Could you declare on your income tax all of your medical expenses (including those covered by the health savings account), take a tax deduction, and somehow "back out" the savings you already got through the health savings account? Would that even work?
I feel a little frustrated ...
Response by poster: No, it's just me. And I always pay out my entire deductible. Sounds like there's no way to fix this.
posted by ClaudiaCenter at 9:11 AM on December 16, 2009
posted by ClaudiaCenter at 9:11 AM on December 16, 2009
This thread is closed to new comments.
I expect you've read the FAQs and such that Google finds?
Plus, there's only $550 left if you actually pay out your entire deductible for medical care, right? If you don't, you can use it for glasses, etc. (also: check out zennioptical, etc.)
This seems relevant: Can I claim both the “above-the-line” deduction for an HSA and the itemized deduction for medical expenses?
You may be able to claim the medical expense deduction even if you contribute to an HSA. However, you cannot include any contribution to the HSA or any distribution from the HSA, including distributions taken for non-medical expenses, in the calculation for claiming the itemized deduction for medical expenses.
I'm not an accountant or tax lawyer, etc.
posted by alexei at 3:48 AM on December 16, 2009