Could you explain the limitations on cafeteria plans? Can a political subdivision offer cafeteria-style benefits like the private sector does, e.g. paying an employee the health insurance dollar amount paid by the employer to a similarly situated employee if the health insurance plan is not elected by the employee?
-- Pat, redevelopment and housing authority
A Dear Pat:
There is almost no difference in the way in which cafeteria plan rules affect public sector plans vs. how they affect private sector plans.
Specific to your question, a political subdivision can indeed offer cafeteria-style benefits like the private sector does, e.g. paying an employee the health insurance dollar amount paid by the employer to a similarly situated employee if the health insurance plan is not elected by the employee.
You prefaced the question I just answered with a much broader question: Can you explain the limitations on cafeteria plans? There are indeed several limitations on cafeteria plans (e.g., plan must be in writing, choices available to employees and actually taken by employees must show a non-discriminatory pattern, flexible spending accounts must have inherent risk, limitations apply to buying and selling vacation days, etc., etc.).
If there are concerns or questions about the broader set of limitations, as they apply to both public and private sector plans, let us know.
SOURCE: Clark J. Yaggy, The Segal Company, Atlanta, GA.
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