What is a POP plan?
A Premium Only Plan (POP) is an employee benefit plan that allows employees to use pre-tax dollars to pay their portion of eligible group health insurance premiums. POP Plans are often referred to as Section 125 Plans because they are permitted under Section 125 of the IRS’s Internal Revenue Code.
How does a POP plan save us money?
Because employees pay for eligible group health insurance premiums with pre-tax dollars, employers and employees realize the following savings:
- Employer savings: Reduced payroll taxes
- Employee savings: Reduced taxable income, thereby increasing take-home pay. Savings depend on each employee’s premium contribution and annual salary amount.
What type of benefit plans can be included in a POP plan?
- The following employer-sponsored group insurance plans can be included
- Medical
- Dental
- Vision
- Short-Term Disability (STD)
- Long-Term Disability (LTD)
- Health Savings Accounts (HSAs)
- Group Term Life (Up to $50,000 of coverage)
Can my employees make pre-tax contributions to their Health Savings Accounts (HSAs) with a POP plan?
Yes, the employer is able to deduct employee HSA contributions on a pre-tax basis through the POP plan.
Which types of employers can establish a POP plan?
A POP plan can be established for a single employer and other types of employers – members of a group of commonly controlled trades or businesses, or an affiliated service group.
Will an employer paying 100% of employees’ premiums benefit from offering a POP plan?
No, the tax savings accomplished by a POP plan are based on employee contributions to your group plans. Employers whose employees are making a 0% contribution will not gain any tax savings.
Which employees can participate in a POP plan?
Common law employees and leased employees, as described in IRC Section 414 (n), are eligible to participate.
Do all employees have to participate?
No, each eligible employee must be given the opportunity to participate or waive the POP plan benefit.
What does a POP plan cost?
A POP plan carries an implementation and annual renewal fee. Your POP plan implementation fee is free for all your W&B sold groups, compliments of The Word & Brown General Agency.
Who is not eligible to participate?
Partners in a Partnership, 2-percent shareholders of an S Corporation, and Sole-Proprietors are not eligible to participate.
What do I need to do to establish the plan?
An EZPOP application must be completed and submitted to ezpop@wageworks.com in order begin the POP plan implementation process. The application is sent to the broker and employer via email upon the group’s underwriting approval.
What does Word & Brown pay for?
Word & Brown pays for the initial POP plan document set-up fee. This means the employer is not responsible for any upfront costs for plan document creation, compliments of you and the Word & Brown General Agency.