Topic: Home > Benefits > Cafeteria Plans
Cafeteria Plans make it easy for the employer to present attractive benefits options to their company’s prospective talent. They are called “cafeteria plans” because they allow employees to pick and choose from a selection of different benefits, just like in a buffet-style cafeteria. But while a cafeteria plan offers the employee a well-balanced choice of benefits, it also helps the employer save. That’s right, it’s tax free. Normal employee benefits plans cannot take advantage of this tax saver, so that certain high cost life insurance policies often come with an increased tax rate. The cafeteria plan, however, includes these policies under its tax-free umbrella. Yet the wisdom of a cafeteria plan goes far beyond the up front savings. It gives the employee a sense of choice, ultimately creating a more happy and dedicated staff. It works by giving the employee a predetermined amount of money – or points – which can be used to buy up the benefits specific to his or her needs. These can include dental, health, life, sick leave, vacations, accidental death, disability and disbursement coverage. Due to the high level of employee satisfaction, it is important to budget a cafeteria plan system that is sustainable throughout the years.
