A recent survey conducted by the American Payroll Association showed that only 12 percent of employees contribute $2,500 or more to their company's FSA. The result is surprising, as reported by Insurance News Net considering reports that workers on average paid nearly $4,000 toward the cost of family health coverage in 2010, according to 2010 Employer Health Benefits Survey from the Kaiser Family Foundation and the Health Research & Educational Trust.
this information is extremely useful for agents and benefit consultants as an upcoming $2,500 limit on the contribution amount for medical Flexible Spending Accounts likely won't impact many Americans, according to recent results from the "Getting Paid In America" survey.
But the results also indicate that many, many enrollees in FSA's are missing out on tremendous cost savings. As health care costs and health insurance premiums continue to grow, employers are increasingly expanding employee cost-shares including coinsurance and deductibles. Employers are also turning more and more to Health Savings Accounts.
Many health plan enrollees now have annual deductibles in the sum of $1,000 or $2,000 annual deductibles. Yet, many of these individuals are either not enrolled in the employer's FSA or perhaps they do not realize they need to fully fund it up to beyond their annual deductible. Many should fund their FSA up to their annual health plan out-of-pocket maximum, especially if they have young children who may be injury prone, or know they have high costs due to cancer treatment, upcoming surgery, etc.
"Employees and employers alike can take advantage of medical Flexible Spending Accounts to manage costs, without forgoing quality coverage and care," said Kevin Hill, Paychex vice president of insurance sales and operations. "FSAs allow employees to reduce their taxable income and increase take-home pay for qualified medical expenses. Employers also receive a reduction in their payroll taxes based on their employees' contributions."
Survey Details
The survey asked "...Did you contribute more than $2,500 last year to your medical Flexible Spending Account?" Only 12 percent indicated they contributed at least $2,500. Thirty-nine percent responded they contributed to an FSA but less than $2,500. Forty- six percent didn't participate in an FSA at all.
"While healthcare costs are a big concern for employees and their families, the survey results clearly show they aren't taking full advantage of FSA plans," said Dan Maddux, executive director of the American Payroll Association. "Employers should encourage employees to take advantage of these and other pre-tax, voluntary payroll deductions to ease the burden of these anticipated expenses."
