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"full" cafeteria plan


Guest celia
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When I worked in private industry, my company had a "full" cafeteria plan in which each employee was alloted a fixed amount of money. Each employee could specify which benefits (s)he wanted to "buy" with the employer's money. The menu included:

disability insurance (mandatory)

medical insurance (mandatory unless you were on a spouse's plan)

dental

vision

life insurance

401k (or 403b/457) investments

medical FSA

dependent care FSA

Other benefits could be on the menu depending on the company offerings. The way it worked is that you selected the benefits you wanted and they would be paid for with pre-tax money. If your choices cost more than the allotment, extra was withheld from your pay. If your choices cost less, you would receive more in pay. Your pay was taxable except for the menu choices that were paid with pre-tax dollars.

I work for a school district now and the only option (other than medical insurance carrier) we are offered is the medical and dependent care flexible spending account that is withheld from our paychecks. The other benefits are fixed whether we want them or not. Because of upcoming fiscal problems at the state (California) level which will impact the school districts, I would like to see the flexibility in having the employees specify their choices. This would allow the district to cap their spending on benefits while allowing the employees to select the benefits they most want. If an employee wants everything, have them "pay" for it. If employees have both spouses in a family work for the district, why have dual medical coverages? Allow one of them to put the money in their retirement plan.

I would like to propose that my district offer the full package but have been unable to find other school districts that offer it as an example. Is there a reason why? Do you know of any districts that do? (if you don't want to list a school district name, please tell the county and state)

I know that the full plan is available to some city agencies, so it is not a matter of working for a non-profit. I wonder if the requirement applies that says employees from all pay grades need to participate, so that the plan doesn't just benefit the higher salaried people. If that is the case, that would explain why school districts don't participate--they tend to have many part-time teacher aides, cafeteria workers, bus drivers, etc who may not be interested in "purchasing" benefits when they have a lower income.

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When I worked in private industry, my company had a "full" cafeteria plan in which each employee was alloted a fixed amount of money. Each employee could specify which benefits (s)he wanted to "buy" with the employer's money. The menu included:

disability insurance (mandatory)

medical insurance (mandatory unless you were on a spouse's plan)

dental

vision

life insurance

401k (or 403b/457) investments

medical FSA

dependent care FSA

Other benefits could be on the menu depending on the company offerings. The way it worked is that you selected the benefits you wanted and they would be paid for with pre-tax money. If your choices cost more than the allotment, extra was withheld from your pay. If your choices cost less, you would receive more in pay. Your pay was taxable except for the menu choices that were paid with pre-tax dollars.

I work for a school district now and the only option (other than medical insurance carrier) we are offered is the medical and dependent care flexible spending account that is withheld from our paychecks. The other benefits are fixed whether we want them or not. Because of upcoming fiscal problems at the state (California) level which will impact the school districts, I would like to see the flexibility in having the employees specify their choices. This would allow the district to cap their spending on benefits while allowing the employees to select the benefits they most want. If an employee wants everything, have them "pay" for it. If employees have both spouses in a family work for the district, why have dual medical coverages? Allow one of them to put the money in their retirement plan.

I would like to propose that my district offer the full package but have been unable to find other school districts that offer it as an example. Is there a reason why? Do you know of any districts that do? (if you don't want to list a school district name, please tell the county and state)

I know that the full plan is available to some city agencies, so it is not a matter of working for a non-profit. I wonder if the requirement applies that says employees from all pay grades need to participate, so that the plan doesn't just benefit the higher salaried people. If that is the case, that would explain why school districts don't participate--they tend to have many part-time teacher aides, cafeteria workers, bus drivers, etc who may not be interested in "purchasing" benefits when they have a lower income.

Most SD employees belong to a union who bargins for health care benefits. Therefore your union would have to reopen bargaining with the SD to change the benefits program which is very unlikely.

Running a cafeteria plan will result in additional costs for plan administration to comply with IRS rules for changing elections and administering the various payment provisions. Such costs are nomally paid by the employer which would require negotation by the union and could result in concessions to reduce other benefits.

I dont understand what you mean by why should two spouses who work for the district have dual medical coverage? Are you suggesting that one parent go uninsured? I dont know of many employees who would prefer to be uninsured. Also allowing employees to chose between a 403b plan contribution and health insurance could create income taxation on the value of the insurance for the employees take the health ins.

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I have asked my union reps to look into this, but before I have people put time into investigating this, I'm trying to find out if we aren't eligible for some reason.

We have several families in which both spouses work for the district. The families are covered under his medical insurance and under her medical insurance. The district is paying premiums twice for these families and all it benefits them (as opposed to paying for it once) is that they have no co-pays. They would be better off being covered once and putting one set of premium payments towards retirement instead. Hope this explains it better.

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You can find out about "full" cafeteria plans, including those using a Benefits Credits design etc by looking at the Benefits section of the website of most large public entities in almost any state.

I am curious about your use of your union reps. Why would union reps, per se, be able to help you any more than you probably could help yourself, especially since you know best exactly what you are looking for?

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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I have asked my union reps to look into this, but before I have people put time into investigating this, I'm trying to find out if we aren't eligible for some reason.

We have several families in which both spouses work for the district. The families are covered under his medical insurance and under her medical insurance. The district is paying premiums twice for these families and all it benefits them (as opposed to paying for it once) is that they have no co-pays. They would be better off being covered once and putting one set of premium payments towards retirement instead. Hope this explains it better.

C:

If the district is paying the cost of the health ins. and some employees get an additional tax free benefit why would the union want to negotiate elimination of this benefit. Unions are not in the business of reducing employer provided benefits. Please explain. Have you asked the employees who get this additonal benfit how they feel about eliminating it? What is the big deal about fiscal problems in CA - Its just a matter of raising taxes to pay teachers the addional money negotiated under the contract. After all CA taxpayers will not have to foot the 14B cost of your goofy govs idea of mandatory health ins. for the 7 million uninsured residents.

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