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Obamacare raised the cost of your kids' braces

An annual cap on flexible spending accounts is increasing medical costs.

By Money Staff Dec 12, 2013 3:41PM

This post comes from Jonnelle Marte at partner site MarketWatch.


MarketWatch on MSN MoneyHere's something your orthodontist is not smiling about: a new tax rule raised the cost of braces this year.


Thanks to a change from the Affordable Care Act that places an annual $2,500 contribution cap on flexible spending accounts, which let workers set aside pre-tax dollars to cover medical expenses, some consumers may be spending more on braces, expensive eyewear and other medical supplies they would typically buy with the accounts. Before the new rule, there was no official cap on how much taxpayers could stash into the account, though many companies typically set their own limits of $5,000. For a person in the 25 percent tax bracket, the cap cuts the maximum tax break in half to $625 from $1,250.


Girl with braces at school
© tarajane/ iStock / 360/Getty Images
For families who relied on the accounts to help them cover the costs of pricey medical services like braces, the cap indirectly raises their costs, says Gayle Glenn, president of the American Association of Orthodontists, which along with some other medical groups is calling for the cap to be eliminated. About 65 percent of the roughly 17,000 orthodontists surveyed by the association in 2009 said their patients used FSAs to pay for treatment.


And with the cost of braces ranging from $5,000 to $7,000, many families likely max out their FSA contributions to pay for them, says Glenn, whose association recently circulated a letter for orthodontists to publish in their local newspapers, encouraging people to write to Congress to challenge the cap. "We want people to be aware," says Glenn.


To be sure, not all health care pros are fighting the annual contribution cap to FSAs, which they say has led to positive changes for taxpayers. Without the cap, Treasury officials wouldn't have been likely to do away with the 30-year-old "use it or lose it" rule requiring taxpayers to spend their entire balance by the end of the year or forfeit the funds, says Bob Natt, executive chairman of Alegeus Technologies, a company that provides payment and open enrollment technology for employers.


In October, the Treasury Department announced a change to let people carry over $500 of their balances into the following tax year, which could make many taxpayers more comfortable with using the accounts, says Natt.


"We anticipate there will be a large increase in people who choose to participate in FSAs because they no longer have a fear that they’ll lose their money at the end of the year," he says.


Dental expenses are the third most popular use for FSAs, according to an analysis by Alegeus, which found 38 percent of FSA dollars are spent on medical expenses, 28 percent at the pharmacy and 23 percent on dental expenses. Glenn says her group will send representatives to Capitol Hill to make the case for repealing the $2,500 cap, as well as to address other issues. Lawmakers have introduced a number of bills that would loosen the restrictions on how FSAs can be spent and repeal the cap, but it isn't clear how likely such bills are to pass.


More from MarketWatch:

Dec 12, 2013 4:57PM
I thought Obamacare was the "AFFORDABLE" Care...??????? Where, exactly, is the affordable part? Have yet to see it.
Dec 12, 2013 4:54PM

Man, that's just awesome.  I have two small children that I already know are going to need braces in the next few years.  Nice to know that my productivity and hard work, and my years of trying to do the right, responsible thing will pay off for the leeches who sit home and don't do sh!t.


Gee, it's too bad that nobody tried to warn us about the coming clusterfvck we could expect with Obamacare.  /sarc

Dec 12, 2013 4:40PM
All the fools that voted for this lying chump! 
Dec 12, 2013 4:54PM
The good times just keep rolling from Obamacare.  I can't wait to see what other goodies are revealed as we move forward with this fiasco.  I bet there are more taxes and fees hiding in there.
Dec 12, 2013 5:17PM
Awesome, another example of punishing those who are responsible to pay for those who are not. Bravo America, Bravo.
Dec 12, 2013 5:07PM
OBAMACARE .... everything costs more?? Taxes are higher, deductables are way higher,  premiums are higher. But hey ... what the hell eh Barry??? Plus nobody in this country wants this bill, but eh, what the hell, eh Barry?? WHAT A CLOWN!!
Dec 12, 2013 5:16PM
And the next time someone says "pass it so you can read it" you will say what?
Dec 12, 2013 5:26PM

Freaking rip off!


My insurance was just fine until Obama decided to use it to gain votes.


The few that didn't have health insurance could have gotten it through any of the 1,000s of state run plans, but no, now I am losing my doctors, my insurance, a lot more money all so that Democrats can claim to be compassionate.

I'm voting straight Republican from now on, just out of spite of the idiocy of Democrats.
Dec 12, 2013 4:34PM
Those who earn more are again paying a tax (let's call it a higher deductible and/or premium in this case) to progressively subsidize and make equal the care of those who earn less.  Okay if that's what the country wants, but let's call a spade a spade. 
Dec 12, 2013 4:51PM
Just wait until the backlash of the extremely high deductibles and restricted access to care is felt by the uninformed voter. Highly qualified doctors are dropping like flies only to be replaced by nurse practitioners and physicians assistants. Expenditures on new medical devices and improvement in infrastructure by hospitals will be almost nonexistent.
Hey Democrats, how many more kicks-in-the-nuts do you require before you realize that Obamacare is not a good thing?
Dec 12, 2013 4:43PM
Looks like the price of the Obamacare policies is not the only "PREMIUM" we are expected to pay!!!
Dec 12, 2013 5:26PM
Scrap the whole thing and start OVER!
Dec 12, 2013 5:31PM
It must be those evil insurance companies, or evil republicans, or racists, or tea baggers or George Bush. I mean Barack couldn't have know about this, he is trying to help. LMAO 
Dec 12, 2013 4:33PM
  Translation not only must you buy democrats food their teeth are utterly helpless as well. Now back to your lowest labor participation rate since 1978 17 trillion in debt 1 trillion a year of wall street welfare you moron twat scum bag democrats. Did I mention what a load of degenerate leech sucking losers you are? Look around 3rd world turds homos nerds whores all joined in Nazi bliss of voting for free stuff. Yea team!
Dec 12, 2013 5:03PM

With my wife's employer, we received $1,500 per family member for eye/dental free if we did not use their insurance plan.   This will be gone next year.   Thankfully, health insurance at my work has not changed but up $50 more per month premium.   Many consequences in this ACA.   More to come.

Why didn't someone warn us Americans of the cluster fu*k that Omabacare was going to cause, damn you!
Dec 12, 2013 5:56PM
I guess all of you that voted for Obama may now have many regrets..... some of you had good reason for casting your vote for him, being because you were young, uninformed of under medication the others most likely really dumb, ignorant or getting handouts. Well looks like for all of you and the rest of us we are going to feel the pain for you *uc*ing up. Now we all will suffer the consequences. Way to go....loser's
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