Employees let cash slip away
Employees forfeit millions of dollars a year because they don’t use all the money they contribute to health care flexible spending accounts by year’s end – giving up cash even as they face rising health care costs.
An estimated $210 million in unspent money is forfeited each year.
About 7 million Americans are enrolled in flexible spending accounts, according to the Employers Council on Flexible Compensation. Employees put on average about $1,000 into these accounts annually. Research by Mercer Human Resource Consulting shows that about 3 percent is forfeited because the programs require employees to “use it or lose it” – surrendering any money not used that year. The beneficiaries are employers, who typically use the money to cover the costs of administering the accounts.
Health care spending accounts let employees contribute a set amount of their paychecks each month to out-of-pocket medical costs. Because the money is exempt from federal, state and payroll taxes, employees can save 30 percent or more on medical costs.
The amount companies gain from unused spending-account funds is negligible, benefit experts say. “Most employees will figure out how to spend it,” says Paul Fronstin, director of the health research and education program at the Employee Benefit Research Institute, or EBRI.
Beware of the rebates
There’s a fine line between rebates and deception, and unfortunately many retailers and merchants push the boundary.
“It’s a bait and switch, getting consumers to believe they’re getting a lower price when they’re not,” said Gail Hillenbrand, an attorney for Consumers Union. “Rebates have become prevalent because it’s cheaper to offer rebates instead of a real price markdown.”
With rebates becoming a standard practice among retailers over the past few years, consumers are speaking up about glitches in the system.
“The majority of the complaints we hear are from people not receiving their money,” said Sheila Adkins, of the Council of Better Business Bureaus. “Often rebate claims get rejected because the consumer didn’t send in the right paperwork or follow other rules.”
Adkins said rebate rules are a deliberate ploy to pay fewer rebate claims; the more convoluted directions get, the less likely people will follow them correctly, if at all.
However, the rules have a more dignified purpose, argued Ellen Tolley of the National Retail Federation. “Manufacturers offering rebates are aware that fraud can occur – someone might Xerox their receipts and then try to make multiple claims for payment.”
Keep track of your valuables
The Insurance Information Institute, an industry-funded organization, is offering free, downloadable software to help people inventory their household goods.
“An up-to-date home inventory is one of the best ways to make the most of your insurance dollars,” says Jeanne Salvatore, the insurance institute’s vice president of consumer affairs.
An inventory — essentially a list of all of one’s personal possessions and their estimated values — can help guide how much insurance you buy, as well as settle claims faster if there’s a loss.
The software is found at www.knowyourstuff.org. It includes lists of possessions that can typically be found in certain rooms and can be customized with digital photos and videotapes. Once it’s created, it can be burned to a CD or printed and stored in a safe-deposit box or can be e-mailed to another person or even to yourself, because even in the event of a disaster you can access your e-mail remotely from another computer.
The insurance institute notes that the software is downloaded to your computer and it does not have access to the files you create on it.