Proactive Savings
Premium Only Programs (POPs)
Premium Only Plans offer a way to reduce the cost of employee benefits by providing substantial tax savings to both the employee and the employer. POPs reduce payroll taxes on the premium contributions of participating employees. The plan saves money by converting premiums from an after-tax expense to a pre-tax expense. The qualified insurance premiums that can be converted to pre-tax expenses include health, dental, vision, group term life (up to $50,000) and disability.
How Do POPs Work?
Section 125 of the Internal Revenue Code allows employees to pay certain insurance premiums with pre-tax dollars. Employees who contribute reduce their taxable income by the amount of their premium contributions, so they pay less federal income tax, FICA tax, and state tax. A company’s taxable payroll is also reduced by the amount of employee premium contributions, and most employers are eligible for POPs. Exclusions include sole proprietors, 2% or more shareholders in an S Corp, and partners within a partnership. However, employees of these type companies may participate.
Flexible Benefits Administration
Under Internal Revenue Code Section 125, employers can adopt a plan to allow participants to set aside money on a pre-tax basis to pay for qualified medical and dependent care expenses. Let our team at BeneFlex help your company affordably implement a Flexible Spending Account program for your employees.
Employees can use pre-tax money for:
- Healthcare
- Dependent Care
- Other Insurance Premiums
