Benefit Blind Spots: Clearing up Common Misconceptions

Even the best benefits package can fall flat if employees don’t know how to use it — and the truth is, many don’t. From confusing account types to misunderstood deadlines, misconceptions about benefits are surprisingly common. This leads to employees who are less likely to engage with their benefits, more likely to overlook valuable resources, and often left feeling frustrated by a system that’s meant to support them.

Common Misconceptions — and the Truth Behind Them

A recent survey found that 73% of employees want more education on their available benefit options. This indicates that employees are looking for more support in understanding their benefits, including flexible spending accounts (FSAs), health savings accounts (HSAs), lifestyle spending accounts (LSAs) and more. In fact, many employees are unaware of how these accounts work, what expenses are eligible, or how to maximize the tax advantages.

Let’s take a closer look at some of the most common benefit blind spots and why they matter.

“FSAs and HSAs are basically the same thing.”

While both accounts offer tax savings for health-related expenses, they’re fundamentally different:

• FSAs are employer-owned, have use it, don’t lose it rules (with some exceptions), and don’t require a high-deductible health plan (HDHP).
• HSAs are employee-owned, roll over year-to-year, and require enrollment in an HDHP. It functions more like a traditional bank account but will require enrollment in a different type of health plan.

Confusing the two can lead to poor plan selection and reduced savings opportunities. Since there’s no one-size-fits-all for plans, employees can make the wrong choice based on not having the right information. For example, someone who qualifies for an HSA but chooses an FSA might lose the chance to build long-term savings and investment opportunities. Conversely, someone who selects a HDHP just to get an HSA may not understand the implications of having a higher deductible and may face unexpected out-of-pocket expenses.

“HSA funds must be used by the end of the year.”

This is a persistent myth that can cost employees a lot of money. Unlike FSAs, HSA funds never expire. They roll over annually and can even be invested for long-term growth and savings. Employees who mistakenly believe they’ll lose unused HSA funds may avoid contributing or under contribute, which means they don’t take full advantage of valuable tax benefits.

Many employees may not realize that an HSA is a powerful tool for long-term financial wellness. By not fully leveraging this benefit, they miss out on the opportunity to build a health care nest egg that grows tax-free and earns interest—funds that can be used for future medical expenses, including those incurred during retirement.  A little education can go a long way in helping them see the HSA not just as an account for spending on current medical expenses, but as a strategic savings vehicle.

“LSAs are just another wellness perk.”

Lifestyle spending accounts (LSAs) are more than gym memberships. In reality, LSAs are one of the most adaptable and employee-centric benefits an organization can offer. Depending on how they’re structured, LSAs can support a wide range of needs: fitness expenses, professional development courses, ergonomic home office equipment, and even certain child and adult care support.

This flexibility allows employers to tailor their LSA offerings to reflect their workforce’s unique priorities — whether that’s reducing stress, encouraging lifelong learning, or supporting work-life balance. Unfortunately, many employees don’t realize just how broad and impactful these accounts can be. Without clear communication, they may overlook valuable resources that could enhance their well-being and productivity. With LSAs, it’s important for employers to send reminders on what’s eligible and consider what exactly their employees are looking for to make this benefit valuable and understood to employees.

“Commuter benefits are only for public transit.”

Many employees assume commuter benefits only apply to bus or train fares. In reality, pre-tax commuter benefits can also cover parking expenses and vanpooling — depending on the plan. Clarifying this can help employees save money on everyday commuting costs.

By clarifying what’s covered, employers can help more employees take advantage of these benefits — and reduce their commuting costs in the process. It’s a simple step that can make a meaningful difference in everyday financial wellness.

“Unused FSA funds always roll over.”

Some FSAs allow a rollover or a grace period to submit claims, but not all. If employees assume they can carry over unused funds without checking the specifics of their plan, they may be in for an unpleasant surprise — forfeiting money they expected to use.

This misunderstanding can lead to frustration, distrust, and a sense that the benefit isn’t worth the effort. But with clear, timely communication, employers can help employees plan their spending, avoid last-minute scrambles, and make the most of their FSA dollars. A simple reminder before the deadline or a quick explanation on rollover rules can go a long way in protecting employees’ wallets and improving their experience.

“I’ll learn about my benefits during open enrollment.”

Open enrollment is important, but it’s not enough. Employees need reminders and education throughout the year to make the most of their benefits. Waiting until enrollment season often means missed opportunities for proactive planning and smart spending.

The Solution: Year-Round Communication

To help employers address these blind spots, we offer customizable communication toolkits for our FSA, HSA, LSA, and commuter benefit clients. Each toolkit is packed with thoughtfully designed resources that make it easy to connect with employees.

Clients can find everything from presentation slides for team meetings to short, informative videos that break down complicated topics. There are also ready-to-use email templates – including seasonal reminders – along with flyers and webpage content to support your internal communication efforts.

These materials are designed to be flexible. For example, you might pair a flyer with a video to introduce your new LSA offering, send a timely reminder about FSA deadlines, or host a quick lunch-and-learn using our HSA slide deck. However you choose to use them, the goal is the same: help employees better understand and appreciate the benefits available to them.

Accessing the Toolkits

If you’re a current client, you can access the toolkits by logging into your online account. From the main menu, navigate to the Resources section and select Communication Toolkits.