Risk of Losing Money a Big Factor

Experts in FSA programs generally say that the major factor dissuading eligible persons from participating in FSAs is the risk of losing unspent money at the end of the plan year. Money cannot be rolled over from one plan year to another, although legislation to allow this is pending. The Congressional Research in a recent report said the main reasons for lack of participation in FSAs include “employee perceptions of complexity, concerns about end-of-year forfeitures, and limited employer encouragement. For lower income employees, the tax savings may not be sufficient incentive to participate. Dependent care FSAs would likely be of interest only to workers with young children,” it added.