How HR can help employees use every cent of their FSA dollars

The clock is ticking on 2023, and your employees are about to forfeit any untouched funds in their flexible spending account (FSA).

Medical FSAs are a popular employee benefit, with 62% of employers offering them, according to SHRM’s 2023 Employee Benefits Survey. But they are subject to a use-it-or-lose-it rule, meaning once the calendar flips to 2024, any remaining money goes the way of the dodo.

Unfortunately, this is a common occurrence: 68% of workers with FSAs still had funds in their accounts on Dec. 31, 2021, according to Employee Benefit Research Institute data, with the average sum left behind being $455. This may, in part, be due to the fact that many employees don’t fully understand how these, and other similar benefits, work. Indeed, 65% of employees don’t know the difference between FSAs and HSAs, including their distinct rules and requirements, data from Bend, a Boston-based HSA provider, found.

HR can play a critical role in helping employees make the most of and deplete their FSAs so they don’t lose out on hundreds of dollars at the end of the year.

Communication is key. There are several strategies HR can use to make sure employees use every last cent of their FSA money. Step one, clear up any confusion through effective communication, Jeri Hawthorne, Aflac’s CHRO, told HR Brew. That includes making sure employees know the difference between an FSA and an HSA, which is tied to a high deductible health plan. Aflac, for example, uses health fairs to help educate employees on the rules and regulations governing FSAs, Hawthorne said.

Once the rules are clarified, Lisa Myers, director of client services at global advisory firm WTW, said HR should then remind employees to actually take advantage of this benefit. WTW uses text notifications to remind its employees of how much money they have in their account.

“I could get my account balance daily or weekly. I get it every Thursday, and it says, ‘You have X amount left in your FSA,’” Myers told HR Brew.

WTW also incorporated into its employee portal a countdown to remind employees when their plan ends, Myers said.

Since what can and cannot be purchased using an FSA is often an area of confusion for employees, WTW also provides a list of FSA eligible products, including contact lenses, cough syrup, and first aid kits.To that end, Hawthorne said Aflac directs employees to the FSA store.

“It’s like an Amazon version of everything that FSA covers,” she noted. “We recommend to our employees who have an excess to go to that website and look around, because you can get everything.”

Aflac also uses an employee-only Facebook group to share updates and reminders about benefits like FSAs and give workers the opportunity to ask questions.

“When people see that their friends posted a question…it will create a cascade of other questions,” Hawthorne said. “And so that actually tends to work really, really well for us.”

Keep it going. Communication around FSAs shouldn’t be a one-time conversation, Sara Taylor, senior director of employee savings accounts for WTW, told SHRM. Effective, consistent communication throughout the plan year will keep them at the forefront of employees’ minds.

“Take the opportunity to do at least two or three messages before the end of the year—or beginning of the year, if you have the grace period,” Taylor said. “Make an effort to think about what kind of messages your employees need.”