Why employees are failing to use FSAs as effectively as they could be?
Whether you offer the grace period or the rollover method, employees have to do some planning to use their FSA funds effectively. Otherwise, they could easily do what a lot of FSA account holders are doing nowadays …
… forfeiting some hard-earned money.
Research shows most FSA account holders aren’t aware of the many ways in which they can use their funds.
In fact, just 50% of FSA account holders were able to pass a basic proficiency quiz, according to research by Alegeus Technologies. (Note: The problem’s even worse for HSA account holders.)
What they need to know
To help employees get the most out of their FSAs, here’s some info employers can share with them:
1. The latest eligibility list. Many staffers fail to take advantage of FSA tax benefits because they assume products aren’t eligible.
But from smartphone-enabled apps to lip balm, there are more than 4,000 FSA-eligible products available. Direct staff to most up-to-date FSA eligibility list, here.
2. Allowable changes. Generally, employees must commit to their FSA deductions at the start of the plan year. However, there are a number of events (marriage, divorce, birth, employment status change) where mid-year changes are allowed. Be sure employees are aware of these events.
3. Planning tips. Remind employees to plan their FSA purchases by season or by bundling common products (pain relief, eye care, children’s needs, etc.).
One caution: Watch for “stockpiling,” buying too much of one product at once, which is prohibited.
4. FSA debit cards. With FSA debit cards, employees don’t have the hassle of time-consuming paperwork, and HR/benefits pros avoid the questions about that FSA paperwork.
A number of major stores accept this payment.
5. Additional spending options. FSA funds can also be used to pay for eligible expenses of employees’ children, up to age 26. Workers can also get FSA debit cards for children who are away at college.
