Wood, who once said, "One universal benefit program can no longer do the job," was the originator of flexible compensation due to the fact that American corporations and households were becoming increasingly dynamic and globalized.
The concepts include the establishment of a basic "safety net" of benefits to cover financial hazards associated with old age, death and disability, and catastrophic medical expenses, with supplementary benefits offered on a defined contribution basis".
[10][11] Internal Revenue Code Section 125 sets forth the requirements and tax treatment of cafeteria plans.
Under the new ruling, an employee who participates in a Flexible Spending Account plan ending December 31 can still receive reimbursement for claims incurred through March 15 if the extended grace period is adopted by the employer.
Though some cafeteria plans offer an explicit choice of cash or benefits, most today are operated through a "salary redirection agreement", which is a payroll deduction in all but name.
[16] Reasons for implementing a Section 125 plan are primarily for the tax savings advantages for the employer and employee.
The following is a list of over-the-counter items the IRS has determined to be primarily for medical care and eligible for reimbursement.