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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.

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