1. Benefits Implementation Guide
  2. Understanding Flexible Benefits

Understanding Flexible Benefits

Flexible benefit plans, also called flex plans, enable employees to select the benefit choices that meet their needs. Employers provide employees with flex credits that they can use to purchase the benefit plans that they want. Flex credits can be provided in a lump sum that is based on factors such as length of service or in a lump sum that is the same for all employees. Flex credits can also be awarded upon selection of specified benefit plans.

Each benefit plan has corresponding costs or credits. Plans that are less costly to the employer have a lower flex cost to the employee. For example, a medical plan that includes family coverage might cost an employee 15 flex points, while an employee-only medical plan might cost only 5 flex points. A plan that is particularly inexpensive might carry a flex credit to encourage employees to select that plan over a more costly plan.

Organizations typically use one of these methods to administer flexible benefit plans:

  • The employer provides a single lump sum of flex credits that employees can use to purchase any benefits covered, including medical, dental, and specified disability plans.

  • The employer provides a single lump sum or multiple lump sums of flex credits that can be used only to purchase a specific category of benefits.

    For example, an employer might provide a 200.00 USD (United States Dollars) per month flex credit that the employee uses to purchase medical coverage, as well as a 50.00 USD per month flex credit that can be used to purchase dental insurance.

When an employee selects a combination of benefit plans for which the cost exceeds the credits available to the employee, the difference is deducted from the employee's pay through a pretax payroll deduction.

Benefits administrators can enroll employees in flex benefit plans through the Enrollment with Eligibility program (P08334). Employees can also enroll themselves through the self service benefits programs. In both cases, the system maintains a running total of flex credits that are available, spent, and remaining for each employee.