What is a Cafeteria Plan?

A cafeteria plan is an employee benefits plan which lets employees choose from a list of options, much like they might choose from a cafeteria menu. Hence the name, cafeteria plan. There are distinct advantages to cafeteria plans for both employees and employers, especially for small businesses.

Some common inclusions on the menu of a cafeteria plan are:

• Health Insurance
• Childcare Assistance
• Life Insurance
• Payments into Retirement Accounts
• Adoption Assistance
• Paid Leave
• Assistance with Care for Injured or Disabled Family Members

Depending on an employee's needs, he or she can choose from these options to construct the ideal benefits package. For example, a woman who is planning on having children in the near future might choose to put payments toward paid maternity leave, health insurance, and child care.