Health Insurance and Cafeteria Plans.

A group insurance Cafeteria Plan, also known as a Section 125 plan, is a type of employee benefit plan that allows employees to choose between receiving cash or selecting from a variety of employer-provided benefits on a pre-tax basis. Under a Cafeteria Plan, employees can choose to allocate a certain amount of their pre-tax salary to pay for qualified benefits, such as health insurance, dental insurance, vision insurance, flexible spending accounts (FSAs), dependent care assistance, and more. The plan is called a Cafeteria Plan because it allows employees to select from a "menu" of benefits, similar to a cafeteria.

The advantage of a Cafeteria Plan is that it allows employees to use pre-tax dollars to pay for qualified benefits, which can reduce their taxable income and increase their take-home pay. Employers may also benefit from a Cafeteria Plan by saving on payroll taxes and by offering a more flexible and customizable benefits package to their employees.

There are specific rules and requirements for Cafeteria Plans under the Internal Revenue Code, including nondiscrimination testing to ensure that the plan does not unfairly benefit highly compensated employees. It is important for employers to work with a qualified benefits professional to design and administer a Cafeteria Plan that meets the needs of their employees and complies with all applicable laws and regulations.

A Cafeteria Plan is a group Health Insurance term for describing Health Care plans that allow beneficiaries to make benefit choices. Medicare plans are not considered Cafeteria plans, but they are well provisioned and encompass hospitalization, medical provider services, and Part D Medicare prescription drug coverage. Medicare coverage would simulate a well-appointed Cafeteria plan.