Hassle-Free Health Coverage: Cafeteria Plans

With a cafeteria plan, you select health benefits from a variety of options, based on your individual and family needs. Cafeteria plans tend to be more complex (and more expensive) than traditional plans, especially with regard to plan administration, and usually make the most sense for larger employers.

Benefits are elected in advance of the year in which they will be used (benefits to be used in 1996 will be elected at the end of 1995). Taxation of cafeteria plans is regulated by Section 125 of the Internal Revenue Code.