Should FSA Use Tell Us Anything about CDHC

Flexible Spending Accounts (FSAs) have been around for several decades.  They let people set aside pre-tax dollars to pay for things such as daycare or healthcare.  An article in the Chicago Tribune says only about 20% of people use them, but only about 4% of dollars are forfeited per year.

It makes me wonder.  If I can save 30% on things that I spend money on, why wouldn’t I do it.  And, can I learn anything here that is relevant to how consumers view consumer driven healthcare?

Obviously, the use-it or lose-it concept scares people.  But, most of us should have access to data about our historical costs.  (Perhaps not easily, but what’s a hour of your time worth to research this.)  And, if only 4% of money is being lost then most people can plan appropriately (of those that use the benefit).

I think sometimes it could be cash flow for some people, but this is likely something that could be managed.  But, it is a real issue.  We saw it with mail-order pharmacy.  People couldn’t always manage to pay for a 90-day supply upfront.  Most of the executives that develop these benefits don’t think about cash flow issues from an average worker perspective.

Perhaps the plans are confusing or not being sold by HR to the employees.  I wouldn’t doubt this.  And, I am sure there are other reasons and a study out there somewhere that could give statistical data on this.

But, if employees can’t figure out and plan how to use their money in order to take advantage of pre-tax dollars, that tells me we need a lot more data, education, predictive tools, and general information to make CDHC successful.