What is the pop on an insurance policy?
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A premium only plan (POP) is an IRS regulated, employer-sponsored benefits plan that allows employees to voluntarily redirect a portion of their compensation towards tax-free benefits.
What is a pop benefit?
The Benefit that Saves More than it Costs Give your employees the ability to pay for their portion of group health insurance premiums tax-free with a Premium Only Plan (POP). Employees can save up to 30% on the cost of their benefits by avoiding payroll taxes. Even better, POPs save employer taxes as well!
Do I need a POP plan?
IRS Requirement for pre-taxed employee benefits. If you are an employer wanting to allow your employees to pay group health and other insurance premiums with pre-tax salary deductions, the answer is yes, you need a Section 125 plan document.
What are pop deductions?
IRS code Section 125 allows an employer to set up a Premium Only Plan (POP), where an employee’s insurance premium contributions can be deducted from his or her payroll on a pre-tax basis. This can save employees up to 40% on income taxes and payroll taxes. The employer also saves on these taxes.
What is pop eligibility?
Employers. Premium Only Plans (POP) can generally be defined as a type of Cafeteria Plan where the only pre-tax benefit available to employees are for those of insurance premiums. Now, whenever non-taxable benefits are involved, the IRS will usually have some strict rules in place that must be followed.
Who creates a pop document?
The employer
The employer must set up a Plan Document and Summary Plan Description (SPD) before the effective date of the Section 125 POP plan. These documents explain the rules of the plan and are distributed to all employees. The employer should sign the plan document and keep it on file.
Is non discrimination testing required for POP plans?
If you have a Premium Only Plan (POP), the IRS requires you to submit to non-discrimination testing once a year. The reason for nondiscrimination testing is to prevent highly compensated employees from taking advantage of the benefits that these plans provide for employers and employees alike.
What is the difference between a cafeteria plan and a Section 125 plan?
A cafeteria plan, also known as a section 125 plan, is a written plan that offers employees a choice between receiving their compensation in cash or as part of an employee benefit.
What is a pop Section 125 plan?
A Section 125 premium-only-plan (POP), is a cafeteria plan which allows employees to pay their health insurance premiums with tax-free dollars. Traditionally, POP plans have been used in combination with employer-sponsored group health insurance plans.