The Cafeteria Plan

Essay by gailsturnerUniversity, Master'sA-, April 2002

download word file, 2 pages 4.5

Benefits are a big deal when trying to decide what company you want to work for, salary is the most important benefit but you should consider other benefits also. Some companies have a benefits package called the cafeteria plan, this plan allows employees to pick from a group of benefits such as, medical, accident, disability, vision, dental and group term life insurance. There are advantages and disadvantages of a cafeteria plan for both the employer and for the employee, but over all the cafeteria plan is one of the most important packages employers can offer to it's employees.

Advantages to the employers for offering a cafeteria plans is to improve employee morale and to create a more competitive recruitment offer. This cafeteria plan also offers the employer way of getting a big tax break. The employee's don't pay as much taxes so the employer won't pay as much taxes.

This is also a good way to keep valuable employees, because you offer a variety of benefits. Also flexible benefit plans can help small employers provide necessary benefits in a way that helps ease rising costs.

Some advantages of a cafeteria plan are that it is an excellent way for the employee to pay fewer taxes by allowing a company to deduct the cost of certain eligible benefits before taxes. When existing health benefits are deducted from an employee's paycheck on a pre-tax basis, the employee's take home pay increases, allowing him or her to take advantage of additional supplemental insurance products at little to no additional cost, compared with the original income prior to the cafeteria plan. In addition, it gives the employees the power to choose the benefits that meet their individual needs.

Disadvantages for the employee to take part in a cafeteria plan are that...