Shopping cart with medicationsWhile general account eligibility is a leading concern for FSAusers, another 30.8 percent said the over-the-counter (OTC) Rxprovision is the most confusing.


Flexible spending accounts (FSAs) aren't new, and they aren'tparticularly sexy. But each year, more than 35 million Americansenroll in the tax-free accounts to help pay for qualified healthcare needs for themselves and their dependents.


Earlier this year, surveyed more than 1,000 customers toexplore knowledge gaps and uncover what matters most to individualswhen it comes to using their accounts. Following is a summary ofinsights from this survey that can help HR professionals plancommunications and education efforts for the upcoming openenrollment season.

1. Account holders remain confused about where and how to spendFSA funds.

Interestingly, 40 percent of surveyrespondents said they've had an FSA card transaction or claimdenied in the past. This can happen when a product or service isnot an eligible expense, if the vendor does not accept FSA debitcards or if the expense falls outside their current plan year.


Related: Did you know? Amazon now takes HSA, FSApayments


In a world where paper claims are mostly a thing of the past andmost point-of-sale transactions are processed on the spot using anFSA debit card, this remains a major source of frustration for asignificant number of FSA users.

2. Product quality and authenticity is an increasingconcern.

With the rise of third-party marketplaces, the potential forexpired and counterfeit products has increased, and account holdersrealize this puts them at risk. In fact, 85.5 percent ofsurvey respondents said product quality and authenticity was "veryimportant." Product safety is a key issue for consumers, and onethat is all the more impactful in the health and wellnessindustry.

3. Account holders are most concerned about understandingwhat's eligible.

What makes a product or service FSA-eligible in the first place?This is a common question for a surprising slice of FSA users. Morethan 30 percent of survey respondents said knowing whichproducts and services are eligible is the most confusing aspect oftheir accounts.


Product and service eligibility is determined by the IRS, whichfollows the regulation IRS 213(d) to dictate what is considered aqualified medical expense. But what may seem like an obviousmedical expense to some may not fall under these guidelines, sothis continues to be one of the biggest learning curves for newaccount holders.

4. Confusion still clouds eligibility and OTC Rx rule.

While general account eligibility is a leading concern for FSAusers, another 30.8 percent said the over-the-counter(OTC) Rx provision is the most confusing. As a result of theAffordable Care Act, OTC medicines like Advil and Benadryl requirea prescription from a doctor to be reimbursed with an FSA. Thiscontinues to be a pain point for FSA users, although legislation has been proposed that couldreverse this rule in the future.

5. Fewer FSA users are forfeiting funds.

Millions of dollars in unspent FSA dollars are forfeited eachyear when spending deadlines expire. However, this dynamic ischanging as account holders become more aware of deadlines andoptions for spending FSA funds online.


While 12.3 percent of survey respondents said theyforfeited $200 or more during a previous plan year,16 percent said they only lost $50 or less. And animpressive 58.3 percent said they had avoided forfeitingany FSA funds. So, while the "use-it-or-lose-it" rule can bedifficult to navigate, the right combination of account knowledgeand tools can make a difference in preventing forfeiture.


Open enrollment is a key time to educate employees about theirbenefits, and insights like these can be used throughout the yearto help employers maximize enrollment and satisfaction withtax-advantaged health care accounts.


Rida Wong is the chief corporate strategyofficer/EVP of Growth Initiatives at Health-ECommerce where she leads strategic initiatives and new businessventures. Rida has over nearly 20 years of corporate developmentand investment banking experience. She has had FSAs and HSAs since2001 and understands firsthand the confusion, as well as taxbenefits, of these tax-advantaged accounts.

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