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Premium Only Plan (POP)

Premium Only Plans (POP)
What is a Premium Only Plan (POP)?
  • A Premium Only Plan (POP) is a type of flexible benefit plan.  This plan was established by the Revenue Act of 1978 and is governed by IRS code Section 125.
  • A POP allows employees to pay for their contributions to employer-sponsored health insurance, group term life ($50,000 limit), dental and vision coverage with pre-tax dollars.

What are the Tax Advantages of a Premiuim Only Plan (POP)?

  • Increases the employees' take-home pay.
  • Employees are permitted to pay their portion of health insurance premiums with tax-free dollars.
  • Employees save federal, state and FICA/Medicare taxes.
  • The employer does not pay FICA/Medicare taxes on the amount of salary reductions made for employee-paid premiums.