Flex Credits in a cafeteria plan based on wellness activities

[Guest FAQ]

An employer wants to give an incentive to attend nutrition and other "wellness" classes (no health standards are required in order to receive the benefit, so the proposed wellness regulations would not apply). The incentive would be additional employer flex credits under the cafeteria plan.

As a result, some employees will receive say $100 per month in flex credits, while others, who attend the classes, may receive $110 per month. My question is whether, under the cafeteria plan rules, a plan sponsor can give some employees higher flex credits than others (based on attending wellness classes).

EBIA's Consumer-Driven Health Care & Fringe Benefits outline implies that this is possible, stating that "Employers may give employees a financial incentive for participating [in a wellness program] (e.g. a small gift certificate, an extra vacation day, or additional flex credits in their cafeteria plan account)." The treatise does not address the cafeteria plan issues.

Does anyone know whether this could run afoul of the cafeteria plan rules?

[SLuskin]

Wouldn't it depend on factors like - are all employees eligible to participate in the wellness programs, and therefore receive the extra credits? When all is said and done, did the program favor the highly compensated over the nonhighly compensated? I don't think you have to give everyone identical benefits. You just have to make sure that the discrimination tests are passed.

[Guest b2kates]

I agree with SLuskin, a plan may have different amounts to different classes of employees-so long as it satisfies the discrimination rules