This is an interesting result, but a bit perplexing. This line of reasoning would suggest that there is never an inherent benefit to contributing to a FSA thru COBRA. Take 2 cases. Case 1: I spend the $1250 on medical expenses, and the $1250 does NOT flow thru the FSA. Case 2: I contribute the $1250 to the FSA and am subsequently reimbursed from the FSA for incurred expenses. In both cases, I can deduct the $1250 only if I exceed the 10% threshold. So, it would appear that there is no real benefit to flowing the $1250 thru the FSA. (In fact, flowing the $1250 thru the FSA hurts me, in that I have my money tied up instead of earning interest in an investment. Ie, there is an opportunity cost to flowing the $1250 thru the FSA.)
Do you see what I am getting at, Opus17? Thanks.
