Based on Mid-Year Plan Enrollment Data, Alegeus Technologies Finds That Employers That Have Adopted FSA Rollover Are Seeing Double-Digit FSA Enrollment Growth
Published on September 15th, 2014
Alegeus Technologies, the market leader in healthcare and benefit payments, today announced that mid-year plan enrollment results reveal double-digit FSA enrollment and contribution growth by employers that have embraced the new FSA rollover allowance. Alegeus clients who have actively promoted the FSA rollover allowance to their employer groups and eligible employees are seeing 11% incremental growth in FSA enrollment and 9% growth in FSA elections – compared to flat overall FSA market growth.
In October 2013, the US Department of Treasury announced a modification to its so-called FSA “use-it-or-lose-it” provision, allowing a rollover of up to $500 of unused FSA funds at the end of the plan year. Previously, unused employee FSA contributions were forfeited to the employer at the end of the plan year or grace period. This policy change eliminates one of the most commonly-cited barriers to FSA adoption, namely consumers’ fears of losing their money.
According to enrollment data from Alegeus, just 8% of employer groups adopted rollover for their 2014 FSA plans – due in large part to the late timing of the rule change, which occurred at the end of the 2014 open enrollment season. However, Alegeus clients that have fully embraced the policy change are already seeing 30% or higher adoption through mid-year enrollment. And Alegeus believes that adoption rates could go much higher.
The timing of the policy change last year, at the end of the open enrollment cycle, prohibited many administrators and employers from adopting FSA rollover for their 2014 plans,” said Bob Natt, Alegeus Executive Chairman. “However, with ten months behind us to assess and prepare, now is the ideal time for employers to embrace rollover and update FSA plan designs leading into the 2015 open enrollment cycle.
The new rollover provision creates an expanded FSA value proposition and offers enhanced healthcare options for participants. Rollover offers greater funds protection for participants that are concerned about cash flow – such as lower-and middle-income workers who make up more than 70% of FSA participants. The rollover provision also provides added flexibility for those with unpredictable out-of-pocket healthcare costs – such as those dealing with chronic conditions that may face high-cost services/procedures with some ambiguity regarding timing or medical necessity.
It’s still premature to know the full impact of the FSA rollover policy change for the 2015 open enrollment cycle,” Natt said. “However, early indicators are showing that rollover can have a significant impact for those employers that adopt, driving double-digit incremental growth in both FSA enrollment and contributions.
To learn more about FSA rollover, view a recording of a recent Alegeus webinar.
With more than 25 years of growth and innovation, Alegeus is the market leader in SaaS-based healthcare payment solutions. Our highly flexible, white-label platform powers account-based benefit programs such as HSAs, FSAs, HRAs, COBRA, wellness incentives, lifestyle benefits and beyond. We deliver exceptional user experiences and differentiated capabilities that help our partners strengthen their product offerings, operate more efficiently, and unlock their full growth potential. Our partnerships with the industry’s leading health plans, third-party administrators, financial services and benefit solution providers give Alegeus unparalleled reach in the market, with access to more than 100 million commercially insured Americans. And our unique partnership model empowers our clients to achieve outsized results – growing their programs at a rate that is 3-4X the market, and with the highest net promoter scores (NPS) in the industry. We never compete with our clients in the market – we win when they win. Alegeus is headquartered in Waltham, Mass., with operations centers in Orlando and Bangalore, and a large remote workforce.