What is a Cafeteria Plan?
| A Cafeteria Plan is an employee benefit plan which may be designed
to allow participating employees to pay for certain employee benefits
and eligible expenses on a pre-tax basis. These plan benefits might include
all or any combination of the following:
- Payment of health insurance premiums;
- Payment of medical expenses not covered by insurance;
- Payment of dependent care expenses;
- Payment of premiums for other employer-sponsored insurance programs,
such as dental, vision, disability, and group term life.
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What are the IRS rules?
| The Plan must meet the following requirements:
- The Plan must be available to all employees and not discriminate in favor
of certain employees;
- The Plan must have a written plan describing eligibility requirements and
the method of benefit payments;
- The Plan must file an information return each year.
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Why do I need one?
| You should offer a Cafeteria Plan to your Employees because:
- Traditional benefit programs may not meet the needs of today’s diverse
work force.
- It gives your employees control over their benefits and compensation.
- Employers and Employees can take advantage of tax laws that allow for
pre-tax benefit payments.
- It improves your employees understanding of benefit costs.
- It allows Employees to become more efficient benefit shoppers.
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