Cafeteria benefit plans suffer from two defects:
A) cost of administration and employee decisions.
B) cost of administration and adverse selection.
C) employee decision-making and adverse selection.
D) employee decision-making and free riders.

Question

Quizplus · Accepted Answer

Cafeteria benefit plans are complex and costly to administer, and they can lead to adverse selection, where employees choose benefits that are most advantageous to them, potentially increasing costs for the employer.

Cafeteria Benefit Plans Suffer from Two Defects