Cafeteria Plans

In order to allow employees to purchase the benefits that they most value, many employers establish flexible benefit or cafeteria plans—also known as Section 125 plans, after their Internal Revenue Code (IRC) section.

With a cafeteria plan, employees are allocated an "allowance" — a specific amount of premium payments — for the purchase of benefits and an array of benefit options from which to choose. Some of these programs are also called "voucher" plans...