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Benefits and the Cafeteria Plan

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What components can be included in a cafeteria plan? What types of employee compensation plans do you recommend for the company that you are evaluating? Overall, given the personnel make-up of a firm, evaluate an employee benefits plan.

Why should a corporation be concerned about providing benefits for its employees? Hopefully that is not too basic of a question but if it is, we can just use it as a launching point for the discussions.

Before getting into "cafeteria plans," what are some other types of benefits that an employer might offer employees?

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A cafeteria plan (sometimes called a flexible benefit plan) is a benefit plan that allows an employee to have some choice in designing his or her own benefit package by selecting different types and/or levels of benefits that are funded with nontaxable employer dollars.

Benefits - Benefits which can be offered in a cafeteria plan include most benefits ordinarily resulting in no taxable income to employees if provided outside of a cafeteria plan. Some examples are: health, dental and life insurance, accidental death and dismemberment coverage, disability coverage and vacation leave. One exception, group life insurance in excess of $50,000, which is normally taxable, can be included. Although the inclusion of life insurance coverage is permitted, the amounts in excess of $50,000 continue to be taxable.

One type of option available in a cafeteria plan is a flexible spending arrangement (FSA), or Flexible Spending Account, as they are commonly called, is one of a number of tax-advantaged ...

Solution Summary

This solution provides the learner with an understanding of a cafeteria plan when choose employee benefits.

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Flexible or cafeteria benefit plan: components, hurdles, increasing popularity, and examples.

Explain the components of a flexible or cafeteria benefit plan. Discuss the hurdles that must be overcome before such plans will achieve greater acceptance and use. Explain the impact that the Revenue Act of 1978 has on these plans. Include examples and whether you believe these plans are effective or ineffective and why.

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