The two defects of cafeteria benefit plans are:
A)the high cost of administration and wrong employee decisions.
B)the high cost of administration and adverse selection.
C)employee decision making and adverse selection.
D)employee decision making and free riding.

Question

Quizplus · Accepted Answer

The two defects of cafeteria benefit plans are the high cost of administration and adverse selection. The complexity of administering cafeteria plans increases their cost, and the freedom to choose benefits can lead to adverse selection, where employees with higher risks are more likely to choose benefits that cover those risks.

The Two Defects of Cafeteria Benefit Plans Are