Within the midst of the vacations and different year-end actions, it’s simple to miss necessary dates. Nonetheless, one necessary date for HR leaders can’t be missed: The Dec. 31 versatile spending account (FSA) spending deadline impacts an estimated 70% of account holders. Whereas the very last thing any worker desires to do is go away cash on the desk on the finish of their plan yr, roughly half of FSA holders forfeited a median of $441 to their employers in 2022, in keeping with a current report.
Whereas staff respect the tax benefits provided by FSAs, they could really feel intimidated by the principles and rules surrounding these accounts, and practically a third of enrolled customers say they discover FSAs difficult.
HR groups can simplify tax-free spending accounts for workers and hold them engaged and enthusiastic with well timed communication and useful sources associated to eligibility and deadlines. This could encourage staff to make use of (not lose) the precious funds. Listed below are three steps HR groups ought to take to assist staff turn into extra savvy FSA customers.
1. Create quick access to stability and eligibility info.
Step one to assist staff successfully use funds earlier than they expire is to ensure they’re conscious of their FSA stability. HR professionals might help by clearly speaking find out how to entry stability info—whether or not that’s by way of a web-based advantages portal or by calling the FSA administrator on the quantity on the again of their debit card. HR may even put up these reminders in an worker publication or in frequent areas in your constructing. For totally distant organizations, take into account a deadline-spending electronic mail marketing campaign to coach staff throughout the remaining weeks of the yr. Remember to embrace entry to a searchable on-line eligibility listing that permits staff to discover the broad choice of eligible services.
2. Talk the FSA spending deadline and extensions early and sometimes.
Dec. 31 has a means of sneaking up on us yearly. That’s why it’s necessary to share the FSA spending deadline early and hold it seen all year long. Relying on how and the place staff want to get info, use a mixture of communication instruments and channels, similar to crew conferences, intranet messages, emails, and posters or desk tents. Keep in mind to maintain messages clear and straightforward to know, ensuring to spotlight your group’s particular deadlines (together with rollovers and style durations, if provided, and claims run-out) and find out how to examine account balances. Design communications that cowl:
- Partial rollover of unused FSA funds. In case your group affords a partial rollover of unused FSA funds, make sure you clearly talk this to staff. The utmost allowed rollover of 2024 FSA funds to 2025 is $640. Observe that these with an FSA rollover characteristic should not have a grace interval, and vice versa, as solely one of many two is allowed.
- Grace interval. The FSA grace interval is one other non-obligatory deadline extension that employers can present to provide staff further time to incur new bills in opposition to the present yr’s stability. The grace interval is 2.5 months after the plan yr deadline, which for many FSAs is Dec. 31. Meaning staff can incur bills in opposition to 2024 funds till Mar. 15, 2025. If, for instance, your plan yr ends on Mar. 31, the grace interval deadline will probably be Jun. 15. This further time could make it simpler to schedule appointments for FSA-eligible companies. In accordance with proprietary knowledge from Well being-E Commerce, 37% of individuals with a grace interval deadline nonetheless forfeit funds as a result of they aren’t conscious of their deadline or they have no idea how funds can be utilized.
- Claims run-out. An FSA run-out interval offers staff as much as 90 days following the final day of their plan yr to submit receipts and claims for certified bills incurred throughout the FSA plan yr. For FSA members with a plan yr that ends Dec. 31, the final day of their FSA run-out interval could be Mar. 31 for bills incurred by Dec. 31.
3. Display the connection between extensions and forfeitures.
Whereas an FSA rollover or grace interval offers staff further time to make use of their tax-free funds, it’s nonetheless crucial for workers to know that an extension doesn’t make them resistant to forfeiting funds. For instance, if staff elected the most FSA contribution in 2024 ($3,200) and their employer affords a partial rollover of $640, that worker should nonetheless spend $2,560 by the tip of the yr. Equally, a grace interval is just a reprieve from the spending deadline, and Mar. 15 can sneak up simply as shortly as Dec. 31.
The underside line for HR groups is to by no means miss an opportunity to share deadline and eligibility info with staff. By doing so, you may assist staff get extra worth and satisfaction from their accounts whereas enabling them to successfully and effectively handle spending all year long.
