Comments on: FSAs: Arming employees with need-to-know info http://www.hrmorning.com/fsas-arming-employees-with-need-to-know-info/ Your daily dose of HR Thu, 18 Mar 2010 13:43:13 -0400 http://wordpress.org/?v=abc hourly 1 By: R. B. http://www.hrmorning.com/fsas-arming-employees-with-need-to-know-info/comment-page-1/#comment-25101 R. B. Thu, 10 Sep 2009 15:27:44 +0000 http://www.hrmorning.com/?p=4436#comment-25101 Most don't understand that it's a "use it or lose it" benefit. That is one thing, along with the others mentioned above and in "cyndi's" comment, that I always reinforce. I always tell employees to budget carefully to make sure they will actually use the money during the year. I use examples of how to effectively use the FSA, talking to them about things such as dental work they need to have done that's not covered by insurance, contacts (how many boxes do they have to buy a year that aren't covered by insurance), prescription medication co-pays that they have to pay monthly or every 3 months; things like that. The plan is supposed to be a benefit, so I want to make sure no one loses any money if they participate. If they've never participated before, I tell them to be conservative in their estimate the first year so they can get a feel for how much they do actually spend and how well the benefit works for them. This has always worked well and I think employees appreciate that I'm trying to make sure they don't lose any money. I also do an illustration of the difference between using the FSA and not paying taxes on the money they put into "their account" and the taxes they would pay if they didn't use the FSA. I always ask them if they enjoy paying taxes and want to pay more than they have to. I've never had anyone say they did. That's when I tell them, if you know you're going to have to spend this money for covered expenses, why pay taxes on that income? Why not put the money into the FSA instead, reap the tax break and get to use the money right away while taking a whole year to actually put the money in "their account" (I always stress that it is their account...their money) just a little at a time from each pay check? This is usually when the light bulb goes on. Most don’t understand that it’s a “use it or lose it” benefit. That is one thing, along with the others mentioned above and in “cyndi’s” comment, that I always reinforce. I always tell employees to budget carefully to make sure they will actually use the money during the year. I use examples of how to effectively use the FSA, talking to them about things such as dental work they need to have done that’s not covered by insurance, contacts (how many boxes do they have to buy a year that aren’t covered by insurance), prescription medication co-pays that they have to pay monthly or every 3 months; things like that. The plan is supposed to be a benefit, so I want to make sure no one loses any money if they participate. If they’ve never participated before, I tell them to be conservative in their estimate the first year so they can get a feel for how much they do actually spend and how well the benefit works for them. This has always worked well and I think employees appreciate that I’m trying to make sure they don’t lose any money.

I also do an illustration of the difference between using the FSA and not paying taxes on the money they put into “their account” and the taxes they would pay if they didn’t use the FSA. I always ask them if they enjoy paying taxes and want to pay more than they have to. I’ve never had anyone say they did. That’s when I tell them, if you know you’re going to have to spend this money for covered expenses, why pay taxes on that income? Why not put the money into the FSA instead, reap the tax break and get to use the money right away while taking a whole year to actually put the money in “their account” (I always stress that it is their account…their money) just a little at a time from each pay check? This is usually when the light bulb goes on.

]]> By: cyndi http://www.hrmorning.com/fsas-arming-employees-with-need-to-know-info/comment-page-1/#comment-24469 cyndi Thu, 03 Sep 2009 20:48:40 +0000 http://www.hrmorning.com/?p=4436#comment-24469 Jared - additional confusion arises when referring to FSA's as 'health savings accounts'. As you know, these are 2 distinct benefits, that cannot be combined (except under very limited circumstances), with the HSA only available if the corresponding medical insurance plan is in place. Staff understanding is greatly enhanced when benefits are not mis-identified. Jared – additional confusion arises when referring to FSA’s as ‘health savings accounts’. As you know, these are 2 distinct benefits, that cannot be combined (except under very limited circumstances), with the HSA only available if the corresponding medical insurance plan is in place. Staff understanding is greatly enhanced when benefits are not mis-identified.

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