An overlooked way to boost flex account participation
July 16, 2008 by Bill MeltzerPosted in: Cafeteria plans, In this week's e-newsletter, Latest News & Views
Looking for a way to make flex accounts a little more employee friendly?
Here’s a strategy that many employers overlook: Many TPAs offer direct deposit as an FSA reimbursement option, rather than sending checks to participating employees. The choice is up to the participant.
One of our readers from New Berlin, NY reports that simply adding this option for employees increased workers’ satisfaction with the turn-around of reimbursements, and offset a common reason some employees gave for not participating in the benefit.
Several employees who hadn’t enrolled in past years because FSA contributions are deducted from their regular paychecks were convinced to enroll because reimbursements went straight to their bank accounts, regardless of the amount deducted to date during the plan year.
Typically, TPAs require employees to submit a voided check if the employee wants the money direct deposited to a checking account. If the employee prefers the money go into a savings account, the employee typically has to submit a direct depost form from his or her financial institution.
Two common errors to watch out for: Some employees make the mistake of submitting a deposit slip rather than a voided check. Administrators typically reject this form of enrollment, thereby delaying enrollment). In addition, it’s up to the employee to notify the administrator promptly of any account changes or closings.
July 17th, 2008 at 1:52 pm
There is a slight typo in your article. Fifth paragraph “Typically, TPAs require employees to submit a voided check if the employee wants the money direct deposited to a savings account.” Savings account should be CHECKING ACCOUNT. You address savings account in the next sentence.
July 17th, 2008 at 2:04 pm
Our participation in FSA increased over 400% with the introduction of the debit card. Particants love the fact they don’t have a payroll deduction then pay out of pocket for services and then wait on reimbursement. Most retailers are now compliant with IIAS which auto adjudicates the swipe and virtually eliminates claim submission.
July 17th, 2008 at 2:31 pm
We use an even more employee friendly way to encourage participation by offering them debit cards with their FSA amount!
July 17th, 2008 at 5:27 pm
We use a popular payroll company to manage our FSA, and they do provide a debit card to all employees, which was a big selling point when we switched from an outside “group” that handled this for us previously (800 employees here). Anyway, I think many will drop the service next year, as the previous group rarely required a receipt to backup the charge, while the current plan requires a receipt faxed for every single charge, and half the time the fax fails. *sigh*
July 18th, 2008 at 8:49 am
The debit card is a great idea in theory, but at our company, I have gotten nothing but negative feedback about it. Not all providers and stores accept the debit card (as we all know). Additionally, our carrier requests a receipt for nearly every charge. If the receipt isn’t received in time, the card is suspended. Unfortunately, the company sends these requests for receipts as encrypted PDF files and even though they have been told how to open them, employees still become confused. Overall, the debit card has been nothing but a headache. I’ve never even bothered to activate mine.
August 21st, 2008 at 2:02 pm
I agree with Dawn & Lauren. Nice concept, however, the reality and requirements for use are another story. Employees must submit a receipt after using the debit card. Subsequently, this in turn has become time-consuming since I know employees are using our fax and accomplishing during company time. And, yes, routinely the cards are suspended. Ultimately, if the receipt is not provided within a specified time frame, the amount is deducted via payroll. I have some employees who have declared that they cannot be bothered to activate their card.