April 04, 2007 (The Editor’s Desk is updated each business day.)

Flexible benefits and reimbursement accounts

In recent years, tax laws have been created that permit certain benefits—including those known as "section 125 cafeteria benefits"—to be paid for with pretax money.

[Chart data—TXT]

BLS publishes data on employee access to three types of section 125 cafeteria benefits: flexible benefits plans and two types of reimbursement accounts—dependent care reimbursement accounts and healthcare reimbursement accounts.

Flexible benefits enable employers to offer benefit plans that allow employees to select from different plan options according to their needs.

Dependent care reimbursement accounts set aside money to be used to pay for expenses including childcare, eldercare, or services to a disabled dependent. Healthcare reimbursement accounts set aside money to be used to pay for out-of-pocket medical expenses including deductibles, co-payments, and other healthcare costs not covered by health insurance. Reimbursement account benefits can be part of a flexible benefits package, or they can stand alone.

The chart shows that, in 2006, employees who worked in establishments with 100 or more employees had relatively high rates of access to each of the three section 125 cafeteria benefits, while employees who worked in establishments with fewer than 100 employees had relatively low rates of access.

It also shows that workers who were employed in metropolitan areas had access to flexible benefits at about the same rates as those employed in nonmetropolitan areas; however, workers in metropolitan areas had higher rates of access to dependent care reimbursement accounts and to healthcare reimbursement accounts than did workers in nonmetropolitan areas.

These data are from the BLS National Compensation Survey program. Learn more in "Pretax Benefits: Access to Section 125 Cafeteria Benefits and Health Savings Accounts in the United States, Private Industry," in the March 2007 issue of Compensation and Working Conditions Online.