In the final blog post of my series featuring benefit trends at WEX, we shine a light on a few FSA trends that might help you as you prepare for open enrollment and communications around your FSA. 

Medical FSA trends

General-purpose medical FSA purchases are categorized within the ÌÇÐÄVlogbenefits platform. From a high level, here’s how medical FSA funds were spent in 2021: 

• Medical expenses: 42%
• Dental: 20%
• Pharmacy: 18%
• Vision: 14%
• Other: 5%

More specifically, a medical FSA covers hundreds of eligible expenses. A few of the more frequent expenses medical FSA funds were spent on in 2021 are:Ìý

• Orthodontists: 14%
• Drug stores/pharmacies: 13.7%
• Optometrists/opthalmologists: 5.8%
• Opticians/optical goods/eyeglasses: 5.7%
• Chiropractic: 1.7%

Dependent FSA trends

The COVID-19 pandemic ushered in some big changes to our lifestyles that affected FSAs, including our need for daycare and other dependent care-related services. As a result, dependent care FSA average contributions declined in 2020. However, within the ÌÇÐÄVlogbenefits platform, we saw a rebound in average contributions in 2021 and 2022. Here are the last five years: 

Want more benefits trends? 

Check out our: 

• Our blog post on HSA employer trends
• Our blog post on LSA trends

Check out our episode of Benefits as we talk through these FSA trends and others we learned.

The information in this blog post is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own counsel. 

ÌÇÐÄVlogreceives compensation from some of the merchants identified in its blog posts. By linking to these products, ÌÇÐÄVlogis not endorsing these products. 

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To maximize participation, how much should employers be contributing to HSAs? What’s the employer contribution sweet spot? In the second post in our blog series highlighting benefits trends we’ve identified, we’ll show you what we’ve learned to help you and your employees get the most from these accounts.Ìý

Why should employers contribute to employee HSAs?

Employee benefits are integral to employee wellness. What’s more fundamental than making sure that your employees have the dollars to seek medical care? The great resignation presented many challenges but this has also presented many opportunities for employers to better support employees with their HSA. Employee benefits are one way employers can differentiate themselves by thinking about their contribution and matching strategy.Ìý

What’s the employer contribution sweet spot?

WEX’s data set is large and comprehensive. For example, 1 in 5 of all HSAs are on the ÌÇÐÄVlogplatform. That means we’re uniquely positioned to help you understand the trends on how participants use their accounts, contribute, spend, and invest.Ìý

of employers on the ÌÇÐÄVlogbenefits platform contributed to their employees’ HSAs in 2021. From these contributions, we have observed some trends on our platform regarding employer contributions:

• The average employer contribution in 2021 was $941.
• For family HSAs, an employer contribution between $1,500 to $1,750 yields the highest employee contribution.
• For self-only HSAs, an employer contribution between $750 to $1,000 yields the highest employee contribution.
• Any contribution of $50 or more will encourage participation.

Participation and investment grows, but most still spend fundsÌý

The industry saw about in the number of HSAs across the industry. And the number of HSA investment assets increased 45% year-over-year.Ìý

While participation and investment in HSAs is growing, only about 7 percent of HSA participants invest any of their funds. The vast majority of HSA participants are spenders and savers.Ìý

Check out our episode of Benefits when we talk through these HSA trends and others we learned.Ìý

The information in this blog post is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own counsel.Ìý

ÌÇÐÄVlogreceives compensation from some of the merchants identified in its blog posts. By linking to these products, ÌÇÐÄVlogis not endorsing these products.

The post HSA trends we’ve identified to help you boost participation appeared first on ÌÇÐÄVlog..

ÌÇÐÄVlogis in a unique position to educate you on the latest benefits trends because of our wide data pool built on our ÌÇÐÄVlogbenefits platform. Join us on our three-part series as we explore the top actionable benefits trends from that data to help you support your employees. I’m kicking off our benefits trends series by discussing the latest trends around one of our buzziest benefits:  lifestyle spending accounts (LSAs). 

LSA trends #1: More employers offering LSAs

Many more employers are offering lifestyle spending accounts in 2022, especially as a recruitment and retention tool. LSAs are post-tax accounts, allowing employers the opportunity to customize an LSA and decide how often funds are distributed into the account and what types of purchases are considered eligible. 

Our data shows there has been a 77% increase in our direct employer clients offering LSAs from 2021 to 2022, with the average employer contribution at $750 for companies with less than 5,000 employees. Over half of LSAs (56%) have funds contributed at the start of the plan year, while 17% have funds contributed on a monthly basis.

LSA trends #2: Increase in LSA employee contribution

Lifestyle spending accounts have become much more popular among employees as well. In fact, there’s been a 305% increase in participant direct enrollments from 2021 to 2022. Employees are drawn to LSAs because they are funded by their employer and they can be reimbursed for purchases of eligible physical, emotional, and financial wellness expenses.

LSA trends #3: Most common eligible participant expenses

Overall, there has been a 215% increase in LSA direct participant spend from 2021 to 2022. Majority of the spend goes towards physical expenses (60%), while 15% is spent on financial expenses, and 25% is for emotional/other expenses. The most popular eligible participant expenses are apparel, gym memberships, workout equipment, and apps/activity trackers and watches.

Interested in learning about HSA and FSA trends?

Or watch our podcast episode below for a full look at trends we’ve uncovered across multiple benefits.

The information in this blog post is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own counsel.

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