Majority Don't Understand Cost Savings Provided By Flexible Spending Accounts
SAN MATEO, Calif., Oct. 6 /PRNewswire-USNewswire/ -- Fall is a time when many working Americans prepare for open enrollment and select their package of employer-provided benefits. A new survey shows that many Americans have significant misperceptions about a common benefit that can help them save money on routine out-of-pocket health care costs: the flexible spending account (FSA).
Eighty-six percent of survey respondents had at least one misconception about how the FSA program works, with a full one in five respondents indicating incorrectly that FSA contributions are subject to income and social security taxes. Additionally, more than half admitted to understanding the least about FSAs compared to other benefits in their workplace, like health and dental insurance and 401(k) plans.
In addition, many consumers did not recognize what items and services they could purchase using an FSA. Nearly 80 percent of household decision makers had trouble identifying expenses that qualified for reimbursement through FSAs, such as insurance co-payments, over-the-counter products, dental and vision care.
"At a time when Americans are looking for ways to cut their health care costs, it's important that employees take advantage of all the benefits available to them," said Joe Jackson, CEO of benefits provider WageWorks, Inc. "Flexible spending accounts are designed to help Americans save up to 40 percent on the health care they need and already pay for out of their own pockets. That's why we're launching a public education campaign to help consumers understand their benefits and learn how they can take advantage of these significant cost savings."
Save Smart, Spend Healthy Educates Consumers about FSAs
This week, WageWorks launches a new national public education effort – Save Smart, Spend Healthy – to inform consumers about how tax-advantaged benefits can be used to save money. The campaign's website, www.SaveSmartSpendHealthy.com, guides consumers through basic information about FSAs using educational videos, a savings calculator and an easy-to-browse list of eligible expenses. Importantly, the campaign helps consumers prepare for open enrollment under the new health care laws and understand the planned changes to FSAs.
"Beyond promoting the opportunity to save, we've launched this campaign to help consumers prepare for changes brought on by health care reform, including responding to the increasing shift of health costs from employers to employees," added Jackson.
Helping consumers become familiar with using FSAs to save on health care is especially important to those whose costs may rise in the next year. A recent study by Hewitt Associates showed that, on average, employees can expect to see their share of health care costs – including premiums and out-of-pocket expenses – rise in 2011 to more than three times what they paid in 2001.
"Since we all have health care expenses, taking advantage of an FSA is a great way to plan ahead and save money during these tough financial times," said Manisha Thakor, personal finance expert and spokesperson for Save Smart, Spend Healthy. "With open enrollment season just beginning in many workplaces, now is the perfect time to learn about how you can make the most of an FSA to help you keep more money in your pocket."
Survey respondents who use FSAs appeared to be happy with the advantages of the benefit. Nearly 90 percent of respondents who are currently enrolled in an FSA indicated that they planned to enroll again next year.
Thakor advised potential enrollees about choosing a contribution amount: "Make sure you spend time reviewing your health care costs from last year before enrolling in an FSA. If you don't know what your health expenses are, try contributing a very small amount this year and then observe how far your FSA contributions go toward your health-related purchases."
This online survey was conducted for the WageWorks Save Smart, Spend Healthy campaign by Schireson Associates. A national sample of 3,000 adults was drawn from two online panels of more than one million Americans from August 17, 2010 to September 14, 2010. The outgoing sample was representative of the U.S. population by age and gender. All respondents were a financial and healthcare decision maker for their household, and all households had to have access to a healthcare plan from either the respondent's employer or their spouse's employer. Oversampling of ten major metropolitan areas was done and then appropriately weighted according to U.S. Census population figures. The standard margin of error was plus or minus 1.8 percent.
About Save Smart, Spend Healthy
Save Smart, Spend Healthy is an educational campaign sponsored by WageWorks, Inc. that provides resources and tips on the advantages and proper uses of flexible spending accounts (FSAs). For more information on the campaign, please visit www.SaveSmartSpendHealthy.com.
WageWorks, Inc. is the nation's largest independent provider of consumer-directed benefits solutions. Products include: flexible spending accounts (FSA), health reimbursement accounts (HRA), health savings accounts (HSA), COBRA and commuter products and services. WageWorks is the only company to deliver a completely integrated spending account solution. It offers products on a single platform with built-in debit cards for health care and convenient account management tools such as electronic-bill payment, cash reimbursement and transit-pass home-delivery services. This reduces the cost of plan administration, while maximizing plan participation and value for employees.
WageWorks is headquartered in San Mateo, California, with offices in major locations throughout the United States. For more information, please visit the website at www.wageworks.com.
SOURCE WageWorks, Inc.