Premium Only Plans (POP)
Pre-Tax Premium Payments IRS Section 125
How POPs Work
Group insurance premiums are deducted from an employee's gross income before taxes are calculated, thus reducing that individual's taxable income. The premiums are forwarded directly to the insurance company.
A predetermined amount is deducted from the employee's paycheck every pay period prior to calculation of tax withholding.
- Funds are used to pay monthly premiums throughout the year as they are incurred.
- Medical, dental, and vision insurance premiums may qualify.
- The employer pays administrative program fees.
Who is Eligible
Employees who are having premiums for company sponsored health insurance deducted from their paychecks are eligible for a POP.
Participant Benefits
Employees pay lower FICA, Federal and State income taxes. Most participants enjoy a tax savings of 29% to 40% annually, depending upon their individual incomes and tax situations.
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