Implementing FSA carryover increased employee participation: ECFC

 

Of employers that offered a flexible spending account (FSA) to employees, 89 percent have implemented the newly-allowed carryover option, and of these employers, 73 percent said participation in the FSA increased, according to recent research from the Employers Council on Flexible Compensation (ECFC).

Background. Over the years, employers and employees alike cited the “use-it-or-lose-it” rule as the main reason why employees do not enroll in FSAs. In October 2013, the IRS revised the rule to allow employers the option to offer a carryover of up to $500 of unused funds. To take advantage of the carryover option, employers had to amend their FSA plans.

Carryover increases perceived FSA value. ECFC found that both employers and employees believe an FSA has more value now as an employee benefit. According to the survey, 91 percent agreed or strongly agreed that employers viewed the carryover as increasing the value of offering an FSA; and 83 percent agreed or strongly agreed that employers viewed the carryover as increasing the value of participating in an FSA.

In general, when asked whether they thought the carryover would impact FSA participation, 75 percent of employers said they thought the carryover option would result in increased FSA participation, while 3 percent thought it would result in a decrease in participation, and 22 percent did not think it would have an impact.

SOURCE: http://www.ecfc.org/news/ecfc-news-ecfc-shares-results-of-march-2015-carryover-survey/

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