Employees not taking advantage of flexible spending accounts
Tuesday, 20 September 2011 16:00
Health Care Costs
Flexible spending accounts (FSA) allow workers to contribute money toward healthcare expenses without paying taxes on the income that they set aside. The U.S. Bureau of Labor Statistics reports that there is currently no law limiting the amount that employees can put into an account.
However, according to the American Payroll Association (APA), there may soon be a $2,500 cap on the amount that workers can contribute to a FSA, though it's unclear how this will actually affect U.S. employees. A recent APA survey reported that just 12 percent of respondents contributed $2,500 into their FSA over the past year.
A total of 39 percent of surveyed workers reported contributing less than this amount into an FSA, while 46 percent said they did not use their FSA at all.
APA officials said that this may be a problem, considering rising costs of healthcare.
"Employers should encourage employees to take advantage of these and other pre-tax, voluntary payroll deductions to ease the burden of these anticipated expenses," said APA executive director Dan Maddux.