Good benefits communication can raise employee Flexible Spending Account enrollment by 20% or more, a recent study found. The benefits of an FSA may be obvious to the seasoned HR Director, but not all employees – or employers – know how valuable these accounts can be.
Both employee and employer enjoy significant tax savings when FSAs are used. Employees save on federal and FICA taxes, plus any additional state and local taxes on medical items paid for through their FSA.
Employers, meanwhile, avoid the 7.65% FICA tax on employee wages. Based on the average annual contribution of $1,340, employers can save $100 per employee. 100 new participants means an average $10,000 in savings per year.
The study set four keys to a successful FSA enrollment campaign:
Know your audience. The study found these statistics about FSA participants:
- Average age: 43
- Marital status: 67% married (59% with children)
- Median income: $55,000-$65,000
- Key benefits decision-maker: Female
The study also found that employees use FSAs to reduce their taxable income, cover gaps in health plans, and finance dependent care.
Craft Key Messages. Clear up common misunderstandings, while highlighting key points clearly and concisely. For example:
- An FSA is not another deduction, but money already being spent.
- The depth and breadth of eligible expenses, i.e. vision care to day care.
With FSAs, it’s easy to get bogged down in the details so be sure that you really focus on what most employees need to know to make a decision.
Select Methods of Communication. You probably don’t need to be convinced that these days employees across most demographics are accessing this type of information on the web. Try and stay away from lengthy, static PDFs and brochures and avoid locking your materials behind the firewall, where family decision makers can’t get to it easily. Putting together a short video on the benefit can be a really effective way to provide something engaging while allowing you to explain the benefit in more conversational terms.
Schedule Enrollment Communications. Reach out to employees up to 6 months in advance with education, as well as re-enrollment and qualified change in status communications.