Who uses flexible spending accounts: Effects of employee characteristics and employer strategies

Citation
R. Feldman et J. Schultz, Who uses flexible spending accounts: Effects of employee characteristics and employer strategies, MED CARE, 39(7), 2001, pp. 661-669
Citations number
18
Language
INGLESE
art.tipo
Article
Categorie Soggetti
Public Health & Health Care Science","Health Care Sciences & Services
Journal title
MEDICAL CARE
ISSN journal
0025-7079 → ACNP
Volume
39
Issue
7
Year of publication
2001
Pages
661 - 669
Database
ISI
SICI code
0025-7079(200107)39:7<661:WUFSAE>2.0.ZU;2-I
Abstract
BACKGROUND. Many large employers offer flexible spending accounts (FSAs) to shelter their employees' out-of-pocket medical expenses from taxes and the reby to encourage the purchase of health insurance policies with higher cos t sharing. However, very little empirical research has examined the individ ual employee's decision to contribute to an FSA. OBJECTIVES. TO estimate equations for the probability that single employees with no dependents and employees with family health insurance coverage wil l contribute to FSAs, and the amounts contributed by those with FSAs. RESEARCH DESIGN. An observational study of randomly-selected employees in 1 5 Minnesota firms matched with information on the strategies those firms us e to promote FSAs. Measures of FSA participation were regressed on expected health care spending, employee socio-demographics, and employer strategies . SUBJECTS. 779 single employees with no dependents and 679 employees with fa mily coverage. RESULTS. Education beyond high school increases the probability that both t ypes of subjects will contribute to FSAs, with marginal effects ranging fro m 16 to 48 percent. The FSA contribution rate for families doubles when the family's marginal federal income tax rate increases from 15 to 28 percent. Employer strategies to encourage participation are also effective in promo ting FSAs. CONCLUSIONS. FSAs are used mainly by high-income and highly-educated worker s. We question whether this is an equitable use of the income tax code.