If it smells like a scam
Suppose your bank launched a new product. They’re calling it a “pay your unexpected bills” savings account.
Here’s how it works. You guess estimate what your unexpected bills will be over the next twelve months. You then deposit that amount in your shiny new account, which, by the way has a nice front-end incentive built in — say, a very attractive interest rate.
But there’s a catch. If, at the end of the year, you haven’t spent all the money — if you underestimated your unexpected bills for the year — the bank gets to seize and keep all the unused funds.
Would you do it?
Or would you laugh all the way to a different bank?
What would you assume about the bank’s motives?
Maybe something along the line of: why, those guys are gambling that a nice percentage of people will mess up their estimates!
“What a scam!”
“I’d like to be in THAT business!”
Isn’t that what you’d think?
So why do people march happily off the “Health Care Flexible Savings Account” cliff without so much as a peep?
Yeah, I know. FSAs are “tax advantaged.” But so what? You make a modest error estimating your next 12 months’ worth of medical bills and you easily wipe out the tax break — and then some.
Am I the only one who bristles at the idea that the insurers who run these things actually get to keep people’s money if they don’t spend it?
Am I the only one who wonders why our politicians, who are certain we aren’t intelligent enough to, you know, manage our own social security contributions, do think we can look in our crystal balls and figure out what prescriptions we might need five months from now? Or whether we’re going to get the flu? Or the likelihood that junior will break his leg? Let alone that any more serious health crisis crop up?
And not only are we apparently all of a sudden smart enough to do that, we’re also smart enough to take our health insurance deductable, figure out what the c0-pays and other uncovered amounts will be for each of these events, and add them all together to reach the final FSA figure.
Am I the only one who’d like to know exactly who came up with this brilliant idea?
Or who suspects it was proposed over an expensive dinner paid for by Washington lobbyists? “Have some more wine, Congressman. That’s right. Good, isn’t it! Now, here’s our idea . . .”
“Do you really think that will fly?”
“Sure! Just tell everyone you’ve done it because you care about the healthcare crisis.”
“I still think people might think — sorry to be indelicate — that it’s . . . well. . . a rip-off.”
“We’ve got it covered. We’ll just tell them it’s the IRS. The IRS makes us keep their money.”
“Why, that’s brilliant! So even if they do notice it’s a rip-off, they’ll blame the IRS and not Congress!”
“Exactly! More cake, Congressman?”
You know what else? I tried googling to find out how much unspent FSA money has gone into insurers’ pockets since this program was launched. I couldn’t find that number.
Wouldn’t you like to know what it is?
UPDATE: My bad — it’s not the insurers who pocket the money. Employers get it. But turns out I’m not the only one who’s had trouble figuring that out . . .
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