DECA Sports and Entertainment Marketing Practice Exam

Which of the following is NOT a characteristic of a "Cafeteria Plan"?

1. Employees have limited choices.

2. It offers different benefit options.

3. It is customized to meet employee needs.

4. Employees select from a variety of options.

The correct answer is: Employees have limited choices.

A "Cafeteria Plan," often referred to as a flexible benefits plan, is designed to provide employees with the ability to select from various benefit options tailored to their individual needs. The defining features of such plans include offering a wide array of benefits, allowing customization based on employee preferences, and enabling employees to choose specific benefits that suit their circumstances. In this context, the statement indicating that employees have limited choices is incorrect because one of the core principles of a Cafeteria Plan is to provide a diverse selection of benefits. This flexibility ensures that employees can pick and choose from a menu of options, catering to their unique situations—such as health insurance, retirement plans, and other perks—rather than being restricted to a pre-set package of benefits. Thus, the correct conclusion is that employees do have a range of choices in a Cafeteria Plan, making the assertion that they have limited choices inaccurate. The other characteristics accurately reflect the essence of such plans, emphasizing variety and personalization in the benefits offered.