Healthcare flexible spending accounts with rollover funds are growing more popular among employers, one survey found.
As companies pursue the most effective HRIS software systems, HR departments have to be wary of the conditions surrounding popular trends and benefits options for employees. One of these is the carry-over Flexible Spending Account, a means of compensating workers that companies can maximize to their advantage.
If they don't understand the benefits of these systems or the proper way to implement them within their business, HR professionals can be confused or misled as to the effectiveness of the FSA. In an article for the San Antonio Express-News, David Hendricks notes that one of the issues discouraging employees from actually using their FSA's is the lack of a rollover option for unspent accumulated money.
Fortunately, two years ago the government approved a provision that allows workers to keep up to $500 in FSA money every year that they haven't spent. WorldatWork recently spoke to Visa's senior director of health care Renee Lutzen, who referenced the growing interest in carry-over options. According to information from a Visa survey, the number of companies that offer FSA's with this provision has increased by 12 percent since last year.
"Employers need to directly compare forfeitures to the savings they could receive from offering the carry over — savings that will come most likely in the form of increased participation rates and additional FICA tax savings," Lutzen said. "Those tax savings could then be used to offset their benefits administrative costs, similar to how the forfeitures were used."
Take strong action towards improving the system for processing such benefits in your home by contracting consultants with HR system expertise.