Flexible Benefit Plan Assistance

What is a flexible benefit plan?

A flexible benefit plan (a.k.a., “cafeteria plan”) is a written plan maintained by an employer that allows employees the option to receive certain benefits on a pre-tax basis. A flexible benefit plan may be simple, allowing for the pre-tax payment of the employee’s share of health premiums (a.k.a., premium only plans or POPs). Or, a flexible benefit plan may provide a full menu of benefits, including reimbursement accounts for health expenses or dependent care expenses, contributions to health savings accounts (HSAs), and more. The written plan must specifically describe all benefits and establish rules for eligibility and elections.

Learn more about Flexible Benefit Plans for Governmental Entities from the IRS Federal, State, and Local Government (FSLG) website

Flexible benefit plan tools and resources
The League, in cooperation with Darcy Hitesman of Hitesman & Associates, has developed a number of tools to help member cities comply with the Flexible Benefit Plan Rules and Regulations.

Model plan documents
The Model Basic Plan Document serves to incorporate many of the various benefits the city may want to consider implementing as part of a cafeteria plan. Through the Model Adoption Agreement, cities select the appropriate benefits they want to offer to employees through the flexible benefit plan and establish other plan rules specific to their own city. The Basic Plan Document and the Adoption Agreement together constitute "the plan."

The Model Adoption Agreement is available below as a PDF document, with a "notes" feature providing additional guidance, and as a customizable Microsoft Word document.

Model summary documents
The model summary description will serve as a customizable information piece that can be provided to employees. It describes many of the rules an employee needs to know in order to best participate in the Flexible Benefit Plan (e.g., the imputed tax rules for coverage provided to non-tax dependent children, the special rules regarding dependent care reimbursements in divorce situations, etc.).
View Model Summary Description (doc)

Model administrative forms
The model administrative forms are customizable based on the benefits the city elected through the Adoption Agreement. The areas highlighted in yellow in the attached forms need to be customized to the city’s plan.

Reduced hourly rate for city-specific assistance
Cities that administer their Flexible Benefit Plan internally can receive a reduced hourly rate ($75 per hour) for document-specific assistance from Hitesman & Associates, a law firm specializing in employee benefits.

For a quote or more information about this service, please contact Kimberly Gust, Hitesman & Associates, at (763) 503-6620 or Kim@HitesmanLaw.com.