Also known as Fleible Benefit Plans, a Cafeteria plan offers an employee of a company the option to choose from a variety of employer-sponsored benefits based on personal needs. As the name might suggest, the many benefits are listed as choices, just like a restaurant might list their choices, allowing the patrons to choose whichever item sounds the most appealing to them. An employer may decide which benefits to offer under the Cafeteria plan, but the most common include: health insurance, life insurance, vision benefits, dental insurance, disability insurance and even cash. The employer will give each employee a specific amount they may spend each month and list the cost of each separate benefit on the Cafeteria plan menu. The allotted amount may not be the same for each employee, and factors such as salary, seniority or age may affect the amount that an employee is provided. To establish a Cafeteria plan, the employer must set up a separate bookkeeping account for the management of funds in and out of this account. Funds received into this account can be through employer contributions, employee contributions through a salary reduction, or a combination of both. The employer must not contribute more than 80% of the total contributions that go into this benefits account, making the required employee contribution requirement greater than 20%. If an employee elects to enroll in benefits that eceed their alotted amount, they will be responsible for 100% of the difference. However, this amount may be deducted from their paycheck pre-taes. A standard Cafeteria Plan menu may look something like this for an Employee Allotment of $500: Health Insurance - $450 Life Insurance - $50 Dental Insurance - $30 Vision Benefits - $20 Disability Insurance - $30 Cash Benefit? Remaining unused balance If an employee elects all benefits on the menu, totaling $570, they will need to pay the $70 over allowance in full. If they elect benefits that do not eceed their allotment, they may request the unused balance as a cash benefit. Additional contributions from an employee are not permitted in order to increase their cash benefit in order to take advantage of the pre-ta savings.