What is a primary feature of a cafeteria plan?

A primary feature of a cafeteria plan is that it enables participants to choose between cash or qualified benefits. This type of plan offers flexibility, allowing employees to select from a variety of pre-tax benefits based on their individual needs and preferences. The advantages include the ability for employees to customize their compensation package, choosing options that might include health insurance, flexible spending accounts, dependent care assistance, and other benefits that can cater to their unique situations.

By allowing this level of choice, cafeteria plans enhance employee satisfaction and engagement, as they can tailor their benefits rather than being bound to a one-size-fits-all solution. This unique characteristic is what distinguishes cafeteria plans from traditional benefit offerings, where options are usually limited and predetermined by the employer.