A POP, or Premium Only Plan allows employers to enhance their employee benefit package while actually saving money! By putting in this simple plan document, your company will save Payroll, Social Security, FICA, and Medicare taxes on every dollar your employees payroll deduct towards their insurance premiums.
Since you can have a short plan year, there’s no reason you can’t start right now
IRC Section 125 considers POP pre-tax premium contribution dollars as employer dollars for tax purposes. As a result, your company’s total taxable payroll is reduced by the amount of the employee contributions. A reduced payroll results in lower payroll-related taxes! The amount of savings depends on total company payroll and how much employees contribute toward their benefits, but any size company can implement a POP plan and save money!
The same kinds of savings are available to every employee in your company who makes a contribution toward their insurance benefits. Because employees reduce their taxable income by the amount of that premium contribution, they pay less income and Social Security Taxes – This savings actually increases their take home pay!
Premium Only Plans can be established for any single employer or certain “related employers,” including members of a controlled group of corporations, members of a group of commonly controlled trades or businesses, or members of an affiliated service group. Certain individuals however are prohibited from participating in a POP plan. These include sole proprietors, partners within a partnership or owners of a Sub-Chapter S Corporation.