What is a cafeteria plan?

Question

What is a cafeteria plan?

Answer 1

I believe it is when you get to pick and choose different plans etc from a buffet or menu of choices.

Answer 2

A Cafeteria plan is a non-standard term, unfortunately.  There are a number of different plans that are referred to by that moniker in California alone.  Most frequently, I hear it used to describe either the Section 125 POP, a Flexible Spending Account or a multi-plan offering from a Carrier.  All of these refer to Group-Sponsored plans.

The multiplan offerings through a Carrier  are just that: you can pick and chose from a variety of plans within the carrier, or in cases like the extinct Pac Advantage and the still operating Cal Choice, you can select from a variety of Carriers as well.

Flexible Spending Accounts (FSA) allow you to take pre-tax deductions from your paycheck to pay for your qualified medical expenses.  This is the Use It Or Lose It plan, however, as any fund allocated into you FSA that are unused at the end of the year are returned to the EmployER.  These are best used to suppliment a medical plan, and can be used to pay for and medical bills you may incur.

Section 125 POP is a plan designed to help you pay for your monthly insurance premium with pre-tax dollars.  I'm not certain why this one is called a cafeteria plan by some people, as it doesn't have much in the way of options...

I hope this was helpful.

Answer 3

A Cafeteria Plan is an employee benefit program. Designed to take advantage of Section 125 of the Internal Revenue Code a Cafeteria Plan allows employees to pay certain qualified expenses (such as health insurance premiums) on a pre-tax basis, thereby reducing their total taxable income and increasing their spendable/take-home income. Funds set aside in FSA accounts are not subject to Federal, State, or Social Security taxes. On average, employees save from $.25 to $.49 for EVERY dollar they contribute to the FSA.

Answer 4

u pick a plan during lunch