A cafeteria plan is a type of employee benefit plan. Cafeteria plans give employees an opportunity to choose among a menu of benefits consisting of cash and certain nontaxable "qualified benefits" (e.g., health insurance, dependent care assistance or medical reimbursements). To avoid current taxation to employees on the nontaxable benefits offered, the cafeteria plan must meet various technical requirements set forth in Code 125. In the simplest form of cafeteria plan, an employee can choose to reduce their salary to purchase health insurance on a pre-tax basis. The employee chooses a nontaxable benefit (health insurance) instead of cash (her unreduced salary). In the most elaborate form of cafeteria plan, the employer contributes an amount to the plan that the employee can spend to buy various benefits. If the employer contribution exceeds the cost of the employee's chosen benefits, the employee may take the excess cash as additional taxable wages, assuming the plan allows such a cash-out option. If the employer contribution is insufficient to pay for the cost of the employee's chosen benefits, the employee can reduce his salary to pay for the excess cost on a pre-tax basis.