Wednesday, October 19, 2011

What's Wrong With Flexible Spending Accounts

So if you don't know anything about what a flexible spending account is, here's a little breakdown.  A flexible spending account is an amount of money that is given to you and you are forced to pay back.  You set the amount of money that you want to receive and at the beginning of the year you receive a credit card with that amount of money on it.  The payback on the money is taken right out of your paycheck.  The payback is divided into 52 equal payments  or 26 biweekly payments or 12 equal payments so that it is paid back in one year.  Flexible spending accounts are  tied in with your insurance.  The only way to have a flexible spending account is to have insurance.  This is not a loan.  In a loan situation, a company gives you money, trusting that you"ll pay them back.  If you don't there is nothing that they can do to you.  They can't send you to jail and they can't garnish your wages.  They can't do anything except ding your credit score which can be damaging enough by itself.  This is not a loan in that you are forced to pay it since it is taken right out of your paycheck.  There is another reason that it is not a loan but we will get into that later.  Basically, the only way to default on a flexible spending account is to quit your job.  Finally a flexible spending account can only be used to cover the cost of medical treatments or dental treatments and to cover the cost of prescription medicine!


So that's the low down on a flexible spending account.  Sounds pretty good, right?  In some ways it's great.  Having a flexible spending account means that if you get sick and have to go to the doctor or you have a dental appt., you don't have to worry about having enough money to cover the cost because you already have the money with you on the flexible spending account.  Or if you get a prescription filled, you can use the flexible spending account to pay for your medicine!  Also money that you put on a flexible spending account cannot be taxed by the federal government.  So if you put $3000 on a felxible spending account, that money is not taxed!


So what's wrong with flexible spending accounts you ask?  Well several things.  For every one thing that sounds good one a flexible spending account, there is something that's bad about having a flexible spending account.  Let's see if you agree!


First would have to be the amount of money that you put on a flexible spending account.  Currently you can put up to $4000 dollars on a flexible spending account.  Starting in 2013, that amount will change from $4000 to $2500.  But that's not why I am complaining.  When I say the amount of money that's put on a flexible spending account is a problem, what I mean is that you have to "guess" on how much time your going to be sick this year.  How much your going to be a the doctor or how much your kids are going to be in the clinic or hospital.  How much time your going to be in the dentist.  Things like that.  My thing is, who in their right mind plans to be sick?  Who plans on going to the dentist expecting to have cavities?  Who plans on their kids breaking an arm?  Who plans like that?  I certainly don't and I hope that you don't either.  I don't think that there is anybody out there that plans to be unhealthy.  The truth is that you cannot plan on things happening.  It's like driving in a car and getting in a wreck.  Nobody plans to get involved in a wreck!  So basically you have to plan on getting sick and guess how much money your going to use that year.  Pretty much impossible.  If you don't put enough on a flexible spending account, you may have to start digging money out of your own pocket that you might not have.  This might get you into trouble in some cases.  On the other hand if you put too much on a flexible spending account and don't use it, well in that case your just going to lose it, which is my next topic.  Once you set the amount that you want to be put into the flexible spending account you cannot change it unless a qualifying event occurs such as the birth of a child or death of a spouse, etc.


Use it or lose it.  One major drawback is that the money must be spent within the coverage period as defined by the benefits plan coverage.  This can be different depending on the type of flexible spending account that you have.  There are several different types but for the most part, they are typically the same.  Some require that the money be used within 12 months while others give you a grace period.  The grace period usually is about 3 months but sometimes can be shorter.  Any money that is left unspent at the end of the coverage period is forfeited and can be applied to future plan administrative costs or can be equally allocated as taxable income among all plan participants.  This is why people call this the "Use it or Lose it" rule.  If you want to get technical, if you don't use some of the money and you lose it, they you are taxed on that money.  Basically you get taxed on money that you didn't have.  Let's say that you put $2000 on your flexible spending account.  They give you the $2000 at the beginning of the year.  You only use $1000 so you lose $1000.  Even though you paid $2000 back through payroll deductions, you still lose that money and then are taxed on the money that "they", the government, took back.  Doesn't make a whole lot of sense.  I'm not sure why you lose the money at all!  If you pay all the money back anyways, why do you lose that money if you don't spend it within a certain time frame?  You earned it, right?  They just gave it to you in advance, yet you are paying it all back with equal payments.  There is not a more devastating feeling than the government taking money away from you that you earned!  Well just one other which ties into my last topic.


Finally, a major drawback is where you spend the money.  The government has designated where you can spend the money that is on a flexible spending account.  The money that is on a flexible spending account must be spent on medical expenses, dental expenses, and prescription costs.  In certain cases it can be spent on things like childcare services.  Used to, you could spend the money on over the counter  medications but as of 2011, this feature has been taken away unless these over the counter medications are prescribed by your doctor of dentist.  However, I don't know of any doctor or dentist that prescribe over the counter medications.  This is the other reason that a flexible spending account is not a loan.  Unlike a loan, you cannot spend it wherever you want.  On a loan, you can spend the money where ever you want.  The only loans that you can't are a care loan or a house loan.


Audits.  This ties in with where you spend the money.  Anytime that you use the money, you are subject to an audit.  They can audit you every time you swipe the card, or they may never audit you at all.  It all up to "them".  What boggles me is why the government tells you where you can spend the money.  Especially when you earn it.  True that they give it to you at the beginning of the year, but if you pay it back then why does it matter where you spend the money?  It's your money and you earned it, yet the government tell you where to spend it!  In my opinion that's totally wrong!  Especially in a free country as we live in.  But that's government for you!


So tell me what you think?  Am I wrong or does what I'm saying have any merit to it at all?







Sunday, October 16, 2011

Out Of Control Infringement

So my son is at his school's talent show.  I'm taking pictures and my wife is taking a video.  My son is 11 at the time and he really knows how to rock on a guitar!  Taught himself how to play he did!  It was awesome!  On of the best acts of the night!

So we go home after the show and then my wife decides post the video to Youtube.  No problem right?  Wrong!  Within a day or two I get a letter from Youtube that the video of MY son playing HIS guitar in a video that WE took, might have might violate copyright laws and therefore be copyright infringement!  But how?  This is a personal video!  We took it ourselves!  

So I got in contact with Youtube and asked how this could possibly be copyright infringement if we took the video ourselves!  I didn't add any type of other stuff into the video that would make it infringement!  The answer I got was this.  The video constituted copyright infringement because he was playing to a song that was copyrighted.  Because the song is in the video, even though I didn't add the song to the video personally, it still constitutes infringement!  I was thinking that this certainly couldn't be right!  So I decided to write to a copyright forum and see what they had to say.

I wrote to the forum and told them my situation.  I gave them another scenario that I was taking video around my house and went into my sons room where he was listening to the radio and then I posted the video to youtube and got an infringement letter.  The forums response was the same as Youtube.  They said that as soon as I posted the video with the song in it as public, that it became infringement even if I did not add the song to the video myself!  Simply that the song is in the video alone constitutes infringement.  

So in a nutshell, if you have ever posted a video to Youtube and it has music in it, chances are that you have broken the law, no matter how the music got there.  Unless of coarse you wrote the song yourself!  But is this the best thing for the music industry to be doing?  I mean, do they really need to pursue these copyright claims the way that they are?  Are not the people posting the videos with music in them in a sense promoting someone else's music?

Personally I think that big corporations like Sony and others should just stop heckling us peons about copyright infringement simply because there are way too many videos out there with music on them!  Every minute on Youtube, there is 24 hours worth of video uploaded.   You couldn't hire enough people to go through all that video footage just to see if there if copyrighted material or music on them!  Why even keep trying?  By posting YOUR music in OUR videos we are just helping promote YOUR music!  Essentially we are advertising for them and who doesn't want free advertising?  Corporate America I guess!

Look, when we go buy shoes at a store, no matter how cheap or expensive they are, we are promoting for that company.  Every shoe has at least two ways to identify it.  One is the name of the shoe, and the other is their logo that is incorporated onto the shoe, usually on either side of the shoe!  Same thing for cars.  When you buy a car, not only is the name of the car on the car but that company's logo is also on the car so people will know one way or another what type of car you are driving!  Clothing companies too!  Old Navy does it more than any other company I know of!  I would go as far as to challenge you to go into an Old Navy store and find something that doesn't have the words Old Navy blatantly obvious on their stuff!  It's all over it!  No matter what you buy from Old Navy, people won't even have to ask you where you got it from because it will be so obvious!  

But what if we didn't want to promote their product?  Do we have a choice?  Can I take these companies to court and demand that I don't want their logo or name on their stuff that I wear of theirs?  Probably not!  In most cases I would figure that I would be told to go shop somewhere else!  Not that it bothers me because it doesn't, but if it did then would I have a case?  Why when I don't want to promote a product, I'm forced too, but when I want to promote a song in a video I make, I can't!  That doesn't make a whole lot of sense!  Big companies every year save millions in advertising by making their customers the promoters of their product, yet big music companies get mad at their customers when they post music to homemade videos that might make them more sales in the long run!  Some of the best music I have in my music library is from videos that I saw on Youtube!  I watched a video, heard a song that sounded cool, got that song info and bought a rocking new CD!  And that's how Corporate America should view this!  People want to promote your music!  Why?  Because they like it and they want others to like it too!  They wouldn't post it to their video if they thought that it was trash and not worth listening too!  

Copyright infringement has gotten out of control.  It's so nit picky!  Most people who copyright infringe, don't even know that they are doing so!  If they did, would they really do it?  Highly doubtful!    Give your customers a break!  Look at it from our view!  People are not intending to break the law, but rather they want to promote the music that they love into their videos!  What's wrong with that?  Customers make or break companies.  When companies stab their customers in the back for petty things, that's when you may lose customers!  And you don't want negative customers!  While a happy customer might tell one person about their good experience, an angry customer will tell every person that they come in contact with about their bad experience!  So Corporate America, keep your customers happy and stop being so legalistic!