Excerpt: In the past three years, several states are experimenting with a new use for an old idea, aimed at lowering costs for both employees and their employers. 'Section 125 cafeteria plans' were created by a 1978 federal law which amended the Internal Revenue Code. Designed as an optional feature for employers, cafeteria plans allow employees to pay for a variety of health care expenses without paying any federal tax on those charges.... As of mid-2008, at least 12 states had adopted a cafeteria plan approach into state-based health reforms, with a dual goal of keeping coverage available and affordable while expanding the numbers using commercial health insurance.

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