How to stop employees from wasting their FSA balances
- Employees with flexible spending accounts (FSAs) often have year-end balances in their accounts, according to a statement from 2020 Onsite Optometry, an in-office eye care provider. Research from Mercer shows that, on average, employees forfeited 4% of their contributions to their FSAs in 2013, the latest year figures were available.
- 2020 Onsite believes the forfeiture figure is much higher now, however, meaning employees could be losing more than $200 million a year. To keep from losing money in their FSAs, the firm recommends that employees check benefit expiration dates with their employers.
- That leftover cash could also be put to better use; employees could buy needed over-the-counter medical supplies for the upcoming calendar year, or even book annual exams with primary care physicians and specialists. 2020 Onsite recommends employees get an eye exam, something the company says 70% of those who have eye exams covered by insurance don’t regularly do.
With the high cost of healthcare, FSAs let employees and their families build savings to pay for medical expenses. Employers should do more to educate their employees about such options, as research shows few employees understand how FSAs actually work. Some employers allow workers to carry over FSA balances into the next year with an expiration date.
FSAs have tax advantages, too. Employees can save as much as 30% on expenses for healthcare for themselves and their dependent.