Health Insurance Daily

Most Workers Don't Use FSAs

While employers embrace flexible spending accounts, workers still are cautious about enrolling in them, according to a recent survey from the International Foundation of Employee Benefit Plans.

For instance, 90% of employers with a Section 125 plan provide an FSA; however, 73% report that only 39% or less of their workers use health care FSAs, and 68% say their participation rate in a dependent care FSA is 9% or lower.

“Although health care FSAs are a way for employees to have some control and save on taxes, employee participation rates are still relatively low,” says Pat Krajnak, director of reference and research services at the foundation, which studies the benefits and compensation industry.

“The low participation rate suggests that employees don't clearly understand the advantages of participating in a health care FSA,” she adds. Most participants use all the funds in their FSAs.

Roughly 62% of employers indicate that 7% or less of employees forfeited money in their health care FSAs, and less than 5% of employees forfeited money in dependent care FSAs. About 92% of health care FSAs are completely financed by employees. Meanwhile, 25% of employers with Section 125 plans give cash incentives or credits to workers who decline health insurance.

Article provided by BenefitNews - November 7, 2006

posted by Mike @ 10:45 AM