A Fixed and Variable Rate (FAVR) plan is when an employer uses both a flat amount (fixed) and a standard mileage rate (variable rate) to reimburse driving costs. The flat amount can go towards more long-term costs, such as car insurance premiums or depreciation of the vehicle, while the mileage rate can cover more immediate costs, such as gas, tolls, etc., based on the varying number of miles an employee drove in a given timeframe.