Despite its name, a cafeteria plan has nothing to do with company-sponsored meals or fun snacks. The term “cafeteria plan” refers to a range of fringe benefits employees can pick and choose from — similar to grabbing what you want at a cafeteria buffet.
These benefits are generally deducted from pre-tax dollars and can include options such as insurance plans, retirement benefits, health savings accounts (HSAs), dependent care assistance, disability insurance and more. Again, employees choose which benefits they want and can opt out of all benefits if they want.