Around 30 million Americans are enrolled in Flexible Spending Accounts. A 2010 Mercer survey revealed that 37% of employees that were offered FSAs opted into one, and on average participants contributed $1,420.

The Employers Council for Flexible Compensation estimates that those who do not deplete their FSA accounts in time lose around $500 or more of their funds. Considering the benefits of using the pretax funds on qualified health expenses in these accounts, it’s pertinent that funds are used to avoid forfeiture at the end of the plan year. Emphasizing budgeting of Flexible Spending Accounts could incentivize more people to enroll – or at least lessen public fears of the “use it or lose it” rule – and save while using these plans.

Another problem that persistently arises is confusion over product eligibility. Many plan participants do not know the breadth of medical products available to them under an FSA ranging from sunscreen to blood pressure monitors and even breast pumps. Stockpiling of products to escape forfeiture of FSA funds (countless boxes of band aids, eyeglasses) will not count as a qualified expense, and more importantly, does not to benefit participants.

FSA usage should be encouraged throughout the year. Budgeting is easy when using an FSA calculator before opting into the plan to help participants estimate their yearly expenses.

Your role when communicating to clients about better FSA budgeting should entail having multiple communications throughout the year. These communications might highlight which services qualify for FSA reimbursement, which products can be purchased with an FSA card, or how other expenses such as dependent care FSAs come into play. Sitting down with clients one-on-one will provide the chance to explain benefits management so that the client feels more in control. Ultimately, communications focused on explaining the multifaceted ways in which an FSA can be applied will also generate a deeper understanding of these tax-advantaged accounts.


Miller is the founder and president of, an e-commerce site exclusively focused on Flexible Spending Account products and services. He graduated with a B.S. in Business Administration from U.C. Berkeley and received his MBA from Columbia Business School. He can be contacted at For more information, visit


Register or login for access to this item and much more

All Employee Benefit Adviser content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access