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Cafeteria Plan

Last updated: March 4, 2018

What Does Cafeteria Plan Mean?

A cafeteria plan is a type of employee benefit in which an employer allows a certain percentage of the employee's pre-tax earnings to be put into a special account. This account can be used by the employee to pay for things like life insurance premiums o medical expenses not covered by insurance.

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Insuranceopedia Explains Cafeteria Plan

Cafeteria plans give employees some flexibility when selecting how they want to use their benefit. Unlike more restrictive group benefit plans, it allows a certain amount of customization.

Another advantage of cafeteria plans is that they reduce the business' tax-reportable income amounts per employee, which can lower the employer's overall tax burden.

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InsuranceLife InsuranceHealth InsuranceCommercial LinesGroup Benefits

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