Changes begin kicking in to help finance health care

    More payments are coming due this year to help finance the federal health overhaul.


    Beginning this year, Americans can sock away just $2,500 tax-free and plan to use it for medical expenses the same year.

    Uncle Sam can tax anything in a flexible spending account above the new limit.

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    Members of the Obama Administration have talked plenty about the benefits of the president’s signature health-care overhaul. That list is long. The Affordable Care Act also includes a long list of small changes designed to generate enough money to insure millions more Americans.

    “Some people argue that they are not little ways,” said Brian Pinheiro, chair of the employee benefits and executive compensation group at the Philadelphia law firm Ballard Spahr.

    “We’ve seen a lot of the design-based changes and a lot of the good things like no pre-existing conditions and coverage of adult children,” Pinheiro said. “And it really shouldn’t come as a surprise there’s going to need to be some kind of payment to this.”

    Some people set aside money each year for costs that might not be covered by insurance such as doctor’s fees, acupuncture, prescription medicine, orthodontia or contact lenses.

    “Without a cap, employees could contribute $5,000, $8,000, $10,000 on a pretax basis to a health flexible spending account, use that money to pay for health care and never pay taxes on it,” Pinheiro said.

    Some expenses often deemed ineligible include skin care, baby-sitting, dance lessons and teeth whitening.

    The new rule applies to spending or “use-it-or-lose-it” accounts. The rules for health savings accounts are different.

    One other change this year: The Medicare payroll tax is higher for wages above $200,000 for individuals and above $250,000 for married couples.

    “You are adding 0.9 percent, it’s going to be something the people will feel,” Pinheiro said.

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