20/9/18 Cafeteria Plans
Also called flexible benefits plans, cafeteria plans allow employees to choose between two or more types of benefits. These programs allow employees to design the benefits portion of their compensation package according to their needs. Like cafeterias, cafeteria plans offer a range of choices, providing employees with the opportunity to satisfy their own compensation preferences within a given dollar allowance.
In cafeteria plans, employees are typically provided individual cash funds that they can distribute among various benefits or retain as cash, although there is a core list of fixed benefits that cannot be exchanged for cash. The most common choices are: health and dental coverage, long-term disability benefit coverage, additional retirement income, qualified legal services plans, and the option of receiving cash instead of benefits. Comprehensive legal plans typically cover most legal services needed by an average person, such as assistance in document preparation, sale or purchase of a home, and consumer disputes.