Cafeteria Benefit Plans

A cafeteria plan (Section 125 of the Internal Revenue Code) is a versatile employee benefit package designed exclusively by the employee. With a cafeteria plan, the employee enjoys non-taxable benefits and elects to direct a portion of his or her salary into the plan to be used to pay for expenses related to a number of areas of his or her choosing, from health care to child care to disability insurance.

The funds deferred from an employee's paycheck to his or her cafeteria plan are non-taxable, which reduces the employee's taxable income and ultimately saves him or her a lot of money on any procedures or other services covered by the cafeteria plan.

Section 125 cafeteria plans benefit the employer as well, by reducing employer FICA, and they increase employee morale, because they show employer concern.

For more information on Cafeteria Benefit Plans click here.