Insurance Glossary

Insurance Term - Flexible Benefits Plan (Cafeteria plan) (IRS 125 Plan)

It is a benefit program incorporated under Section 125 of the Internal Revenue Code that offers employees a choice between permissible taxable benefits, including cash and non-taxable benefits such as life and health insurance, vacations, retirement plans, and child care. Although a common core of benefits may be required, the employee can determine how his or her remaining benefit cash are to be allocated for each type of benefit from the total amount promised by the employer. Sometimes employee contributions may be made for additional coverage.

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