Benefits and Compensation

5 Tips to Help Employees Make Sense of FSA/HSA Changes During Open Enrollment

Flexible spending accounts (FSAs) and health savings accounts (HSAs) are important tools for the more than 70 million people who currently use these accounts to pay for out-of-pocket healthcare expenses or save for healthcare needs in retirement, all while reducing taxable income.

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But these accounts have seen significant changes in 2020, and employees will need help understanding what’s new and how it affects them. Here are five things employees should know about FSAs and HSAs during open enrollment this year.

1. No Prescription Necessary

For years,using FSA or HSA funds to pay for over-the-counter medications, like pain relief or cold medicine, required a prescription. Thanks to the passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March, however, that’s no longer the case, and employees can now use account funds to pay for these everyday health products with no restrictions.

2. Menstrual Care Products Are Now Eligible

Menstrual care products are an essential health purchase for millions of Americans. And the cost adds up, with the average person paying $144 each year out of pocket. Yet menstrual care products have never been eligible for purchase with an FSA or HSA. The CARES Act has changed that, as well. Now, account holders can spend their contributions on tampons, pads, menstrual cups, and more.

3. Care for Overall Well-Being Needs

COVID-19 forced the cancellation of medical procedures for people across the country. That means employees may have extra money left in their FSAs. However, while in-person care may not be as available, FSAs and HSAs can be used to pay for a variety of virtual interactions, such as most mental health and telehealth visits. In addition, with many schools converting to e-learning, parents may need to replenish their medicine cabinets to care for everyday needs. 

4. Increased Carryover

While millions of FSA users have a 12/31 deadline, some can take advantage of an FSA rollover if their employer has allowed for this option. Historically, this rollover was capped at $500, but thanks to Internal Revenue Service (IRS) Notice 20-23, the limit for the maximum carryover amount has increased $50 to $550 and will be adjusted annually for inflation.

That extra flexibility can certainly go a long way toward helping FSA users avoid forfeiture. Employees should keep in mind, though, that any amount in excess of the allowed rollover maximum will be lost, and they will need to manage funds wisely at the end of the year to avoid forfeiture.

5. Virtual Tools Can Help

Because of the continued remote work environment, an estimated 63% of employers say they plan to rely on digital enrollment tools this year. There are many free, online tools and calculators that benefits managers can plug into existing open enrollment communications plans to help employees make informed decisions about these important benefits.

There’s no question that this open enrollment period presents unique challenges, but it also presents opportunities to support employees when and how they need it most. Now is the perfect time to educate employees so they can get the most from their health benefits and their healthcare dollars.

Rachel Rouleau is the Vice President of Compliance for Health-E Commerce, the parent brand of,, and