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December 1989, Vol. 112, No. 12
Flexible benefits plans: employees who have a choice
Joseph R. Meisenheimer II and William J. Wiatrowski
Twice as many full-time employees of medium and large private firms were eligible for flexible benefits plans or reimbursement accounts in 1988 as in 1986. Despite this growth, such plans were available to only 13 percent of workers covered by the Bureau of Labor Statistics' 1988 survey of employee benefits in medium and large firms.1 Flexible benefits plans, reimbursement accounts, and other arrangements, such as leave banks and alternative work schedules, have been the subject of considerable debate and interest in the 1980's, as employers seek to control benefit costs and employees seek to satisfy individual needs.
Flexible benefits plans, also called cafeteria plans, are arrangements in which employees tailor their benefits package to their specific needs. Employees can select the benefits they value most and may forgo benefits of lesser importance to them. Under a flexible arrangement, an employer allocates a specified amount of money to each employee to "purchase" benefits. In this way, employers control the amount they spend on each employee for benefits, while the employee selects the benefits. This method differs from a traditional benefits program, in which an employer offers a standard package with few, if any, choices to employees.2
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Footnotes
1 The 1988 Employee Benefits Survey
is a sample survey of approximately 2,500 private sector establishments in the District of
Columbia and all States except Alaska and Hawaii. An establishment must employ at least
100 workers to be within the scope of the survey. The survey provides representative data
for 31 million full-time employees on a variety of employee benefits, such as leave
benefits, short- and long-term disability coverage, health benefits, life insurance,
retirement and capital accumulation plans, child care, employee assistance programs, and
educational assistance. Survey data are published in a Department of Labor news release
and in the Bureau of Labor Statistics Bulletin , Employee Benefits in Medium and Large
Firms, 1988, Bulletin 2336 (Bureau of Labor Statistics, 1989). In addition , detailed
articles on survey findings are published periodically in the Monthly Labor Review.
2 The survey tabulated the number of eligible employees, those who could receive flexible benefits if desired. To be included in this study, a flexible benefits plan had to offer at least two types of benefits (health care and life insurance, for example). Employees could then choose one benefit, or both, depending on their needs.
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