Premium Only Plan POP - Cafeteria Section 125 Pop Plan Documents

Premium Only Plan (POP)

Save on group insurance premiums with pre-tax dollars

For some employers, Premium Only Plans (POPs) are a great solution! These Plans are for employers who do not want to offer a full Flexible Spending Account (FSA) Plan, but still want to offer a tax benefit for their eligible employees.

A POP is a Section 125 Cafeteria Plan that allows employer-sponsored premium payments to be paid by the employee on a pre-tax basis instead of after-tax. Coverage may include the following:

• Group Medical
• Group Dental
• Group Vision
• Group Disability
• Group Term Life Insurance

The result is a tax savings for employers and employees alike!

Why offer a POP?

A POP provides a cost-effective alternative to satisfy an employer's legal obligation when offering a pre-tax option for employer-sponsored benefits such as group insurance, or a Health Savings Account (HSA). However, it does not provide the same services and benefits as those available through a standard Flexible Spending Account (FSA).

Employer Benefits

Reduces payroll taxes (including Social Security and Medicare):
for every dollar of employee contribution into the POP, employers save 7.65% FICA taxes.
Saves on the cost of administration: the tax savings gained often covers the entire cost of Plan administration.

Number of POP Participants		National Average Paid Employee Premiums		Plan Year		Pre-Tax Dollars Spent Per Year
30	x	$300 per month	x	12 months	=	$108,000

Employer FICA savings = $8,262 annually

Employee/Participant Benefits
• Reduces income taxes (Federal, State, and FICA): pre-tax payroll deductions result in a lower taxable salary.
• Increases take-home pay.

Compliance Service	HR Services
1094/1095 pay or play 226-J Penalties Erisa Wrap Employee Notice Form 5500 Premium Only Plan	HRIS HRIS Software Demo HRIS Enhanced Features HR Library Employer Handbook

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