Overview: Flexible benefit plans allow employees to choose from a variety of benefits offered through the employee benefit program. Choices often include health insurance, retirement plans and reimbursement accounts that can be used to pay for either out of pocket health or dependent care expenses. Flexible benefit plans allow employees to choose the benefits that are important to them at a particular stage of life.
Flexible benefit plans provide a tax advantage for the employee as well as the employer. Employees contribute to the cost of their benefits via a pre-tax payroll deduction. Using pre-tax income to pay for benefits provides employees an opportunity to reduce their taxes. Employer contributions are tax deductible.
There are a number of flexible benefit plans an employer can offer including:
Trends: Flexible benefit plans are just that….flexible! Flex plans allow employers to adapt their benefits in response to ever changing economic and demographic challenges. Many flex plans are responding to rising health care costs and a demand for greater work/life balance, by incorporating wellness initiatives and an option to purchase additional time off into their benefit options. Shifts to more diverse workforces will more than likely present additional opportunities to expand these plans.
Tracy Morley, SPHR, Legal Editor
Employer-sponsored health care benefits are an important part of the overall compensation package used to attract and retain employees. Employers, however, face a number of issues when deciding on employee health care benefits. This section assists HR professionals in understanding the different types of benefit plans (e.g., traditional indemnity, managed care), the benefits that may be offered (e.g., prescription drug, dental, vision), how cafeteria plans work and the impact of the Patient Protection and Affordable Care Act (PPACA).
The US Department of Treasury and the Internal Revenue Service issued a new rule modifying the "use it or lose it" rule for FSAs. The change to the long-standing "use it or lose it" rule, issued on October 31, 2013, is effective immediately.
Employment glossary definition of FSA (Flexible Spending Account).
HR guidance on the benefits of offering flexible benefit programs.