What is a primary reason employers use credit values in flexible benefit plans instead of actual dollar values?

Using credit values in flexible benefit plans primarily allows employers to smooth out benefit inequities and offer cash options to employees. This method creates a more equitable distribution of benefits, providing employees with the flexibility to choose how they want to allocate their benefits based on their individual needs and circumstances.

When employers provide each employee with a set amount of credits, it empowers employees to select benefits that best suit them, such as health insurance, retirement contributions, or even cash. This approach ensures that employees have equal access to a range of benefits while also accommodating diverse situations and preferences.

Offering cash options is advantageous in that it recognizes that not all employees will value benefits the same way. Some might prefer additional cash to use as they see fit, while others may be more inclined to choose additional health benefits. Thus, employing credit values helps employers provide a more tailored and equitable benefit solution, addressing the unique preferences of a diverse workforce.

The other options, while they have their merits, do not encompass the primary reason for utilizing credit values. They may address certain aspects of flexible benefits, but the ability to reduce inequities and provide varied options is a core advantage of the credit system.