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With the end of year right around the corner, many employees are thinking about the upcoming holidays and what they need to get done before the new year starts. Whether they’re focused on booking holiday travel to visit family, finding the best deals on gifts, or thinking about their New Year’s resolutions, employees likely aren’t thinking about one thing — their benefits.
One aspect of benefits often overlooked by employees is flexible spending accounts (FSAs). While this is a valuable benefit for workers, the money in an FSA must be used by a specific day or the remaining money is lost. For many employees, this tax-free income is wasted when FSA holders don't spend all their funds or fail to submit expenses to be reimbursed.
As a broker, you can help to ensure your clients’ employees don’t have to feel the sting of lost funds. The following are a few details to highlight for employers so they can remind employees before the clock strikes midnight.
Use it or lose it
The “use it or lose it” rule generally states that any money left in an employee’s FSA that is not spent by the end of the calendar year is forfeited. However, employers can amend their plan to offer an extension or allow for a carryover of unused funds. Either way, employers should send employees reminders in the last several weeks of the year so they have enough time to use the money they have set aside.
Encourage employees to stock up for next year
FSA funds can be used on hundreds of different qualifying products. As the year comes to a close, provide an FSA checklist to employers so they can educate employees on the expenses that qualify. For example, workers can use their funds to buy an extra pair of prescription eyeglasses, pay for an appointment with a physical therapist or purchase items the whole family can use, such as first-aid kits, hot and cold packs, and thermometers.
Prepare employees looking to elect an FSA
Now is the time to not only remind employees to use their FSA funds, but also to educate those who have elected an FSA plan for the upcoming year. During the open enrollment period, provide FSA calculators so employees can correctly determine yearly out-of-pocket health care expenses. Arming employees with the right tools may help them gain a better idea of how much they should contribute to an FSA so they don’t waste money.
Help ensure employees start the new year off right
FSAs can be difficult to understand, but they are a useful benefits option for many employees. For brokers, now is the time to send year-end reminders to your clients about FSA policies so they can educate their workforce on how these funds can be used. This will help ensure all employees head into 2017 without benefits regrets.
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