While general account eligibility is a leading concern for FSA users, another 30.8 percent said the over-the-counter (OTC) Rx provision is the most confusing.
Flexible spending accounts (FSAs) aren't new, and they aren't particularly sexy. But each year, more than 35 million Americans enroll in the tax-free accounts to help pay for qualified health care needs for themselves and their dependents.
Earlier this year, FSAstore.com surveyed more than 1,000 customers to explore knowledge gaps and uncover what matters most to individuals when it comes to using their accounts. Following is a summary of insights from this survey that can help HR professionals plan communications and education efforts for the upcoming open enrollment season.
|1. Account holders remain confused about where and how to spend FSA funds.
Interestingly, 40 percent of FSAstore.com survey respondents said they've had an FSA card transaction or claim denied in the past. This can happen when a product or service is not an eligible expense, if the vendor does not accept FSA debit cards or if the expense falls outside their current plan year.
In a world where paper claims are mostly a thing of the past and most point-of-sale transactions are processed on the spot using an FSA debit card, this remains a major source of frustration for a significant number of FSA users.
|2. Product quality and authenticity is an increasing concern.
With the rise of third-party marketplaces, the potential for expired and counterfeit products has increased, and account holders realize this puts them at risk. In fact, 85.5 percent of survey respondents said product quality and authenticity was "very important." Product safety is a key issue for consumers, and one that is all the more impactful in the health and wellness industry.
|3. Account holders are most concerned about understanding what's eligible.
What makes a product or service FSA-eligible in the first place? This is a common question for a surprising slice of FSA users. More than 30 percent of survey respondents said knowing which products and services are eligible is the most confusing aspect of their accounts.
Product and service eligibility is determined by the IRS, which follows the regulation IRS 213(d) to dictate what is considered a qualified medical expense. But what may seem like an obvious medical expense to some may not fall under these guidelines, so this continues to be one of the biggest learning curves for new account holders.
|4. Confusion still clouds eligibility and OTC Rx rule.
While general account eligibility is a leading concern for FSA users, another 30.8 percent said the over-the-counter (OTC) Rx provision is the most confusing. As a result of the Affordable Care Act, OTC medicines like Advil and Benadryl require a prescription from a doctor to be reimbursed with an FSA. This continues to be a pain point for FSA users, although legislation has been proposed that could reverse this rule in the future.
|5. Fewer FSA users are forfeiting funds.
Millions of dollars in unspent FSA dollars are forfeited each year when spending deadlines expire. However, this dynamic is changing as account holders become more aware of deadlines and options for spending FSA funds online.
While 12.3 percent of survey respondents said they forfeited $200 or more during a previous plan year, 16 percent said they only lost $50 or less. And an impressive 58.3 percent said they had avoided forfeiting any FSA funds. So, while the "use-it-or-lose-it" rule can be difficult to navigate, the right combination of account knowledge and tools can make a difference in preventing forfeiture.
Open enrollment is a key time to educate employees about their benefits, and insights like these can be used throughout the year to help employers maximize enrollment and satisfaction with tax-advantaged health care accounts.
Rida Wong is the chief corporate strategy officer/EVP of Growth Initiatives at Health-E Commerce where she leads strategic initiatives and new business ventures. Rida has over nearly 20 years of corporate development and investment banking experience. She has had FSAs and HSAs since 2001 and understands firsthand the confusion, as well as tax benefits, of these tax-advantaged accounts.
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