Employee choice of flexible spending account participation and health plan.
Despite the fact that flexible spending accounts (FSAs) are becoming an increasingly popular employer-provided health benefit, there has been very little empirical study of FSA use among employees at the individual level. This study contributes to the literature on FSAs using a unique data set that provides three years of employee-level-matched benefits data. Motivated by the theoretical model of FSA choice presented in Cardon and Showalter (J. Health Econ. 2001; 20(6):935-954), we examine the determinants of FSA participation and contribution levels using cross-sectional and random-effect two-part models. FSA participation and health plan choice are also modeled jointly in each year using conditional logit models. We find that, even after controlling for a number of other demographic characteristics, non-whites are less likely to participate in the FSA program, have lower contributions conditional on participation, and have a lower probability of switching to new lower cost share, higher premium plans when they were introduced. We also find evidence that choosing health plans with more expected out-of-pocket expenses is correlated with participation in the FSA program.
Hamilton
Barton H
BH
John M Olin School of Business, Washington University in St. Louis, St. Louis, MO, USA.
Marton
James
J
D000328:Adult; D000367:Age Factors; D002755:Choice Behavior; D017047:Cost Sharing; D003430:Cross-Sectional Studies; D005260:Female; D006264:Health Benefit Plans, Employee / Q000191:economics* / Q000706:statistics & numerical data*; D006801:Humans; D007348:Insurance, Health / Q000191:economics / Q000706:statistics & numerical data; D008297:Male; D008875:Middle Aged; D015233:Models, Statistical; D011336:Probability; D012737:Sex Factors