The term ‘Special Needs Tax’ may sound like a politically loaded term, but it is frightfully accurate and applies to my family. The term was coined over two years ago when parental advocates for the disabled discovered a very disconcerting fact in the National Health Care Reform bill passed into law. Starting in 2013, corporate health care Flex Spending Accounts, or FSAs, will have a cap of $2,500 per year. Most companies currently have an employer designated maximum in the neighborhood of $5,000 per year.
Sadly, there is one type of family that this tax increase will hit the hardest: families raising children with special needs. Families such as mine go into the year already knowing we will spend more than $5,000 in healthcare, special education, and medical services. If you are in this situation as well, make sure you document all your expenses including any TEFRA parental fees for your tax planning in the next year. You can still declare any of your medical expenses that exceed 7.5% of your family’s adjusted gross income. The other thing you can do is reach out to your congressman and alert them to how this cap will negatively impact your household. If you would like to learn more about this topic as well as tax deductibility of TEFRA parental fees, let me know.