Open enrollment is the perfect opportunity to make sure employees understand and make the most of the benefits offered them. By taking full advantage of all an employer’s perks, the savings could really add up for a workforce. Clear communication that outlines the value of each perk, especially the unique ones, in a complete benefits package will help demonstrate a company’s commitment to the wellbeing of their employees and potentially increase employees’ overall job satisfaction levels.
Why FSAs Are So Important for Employees
According to the 2016 PwC’s Employee Financial Wellness Survey results there’s work to be done to ensure employees’ perceptions of their company’s benefit offerings match the true value of what’s being offered them. The survey found that by generation only 50% of Millennials, 59% of Gen X, and 59% of Baby Boomers believe their employer’s benefit plans are competitive with those offered by other organizations.
What benefit gets the biggest bang for the buck? A recent 2016 Glassdoor Employee Benefits Review found healthcare has the biggest impact on employee satisfaction. While time is usually given to outlining employer-provided health plans, flexible spending accounts (FSAs) are often a less opted for benefit yet provide another strategy to help employees save for healthcare expenses. And according to the PwC report there’s a growing need for utilization of this benefit. Based on lifestages they found:
Parents
- More than one in five employees (22%) provide financial support for parents or in-laws (up from 16% last year).
- More than one in five (22%) provide care for parents or in-laws (up from 14% last year).
Children:
- Among Gen X employees, 59% have dependent children and 55% of them are paying dependent care expenses, yet only half (52%) of those paying dependent care expenses are contributing to a dependent care FSA.
- Among Millennial employees, 49% have dependent children and 67% of them are paying dependent care expenses, yet only half (52%) of those paying dependent care expenses are contributing to a dependent care FSA.
Communicating the Upside of FSAs
Laying out the upside of FSAs for employees needs to begin with communication of the following details:
- Contributions from a paycheck are made on a pre-tax basis.
- Contributions aren’t subject to federal income tax, Social Security tax, and in most cases, state income tax.
- The tax savings help offset the cost of eligible health care and dependent day care expenses.
- Reimbursements from a FSA are not taxed.
FSA Contributions and Other Perks
In 2016 employees could save up to $2,550 for an individual FSA and $5,000 for a family (2017 maximum contributions should be available in October). Most employers offer the carry-over option, which means employees can roll $500 of unused FSA money into the following year. Contributions are usually made through equal installments and can help employees budget and save, and lower their tax bill dollar-for-dollar.
Additional perks such as a Healthcare FSA debit card will further enhance employees’ experiences with this benefit. As employees continue to think about their financial wellbeing, providing options that encourage participation and savings for future healthcare expenses will benefit employees and employers alike.
