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Section 125 - Premium Only Plan (POP)

Let Advanced Benefits install a Section 125 plan for your group today!  Plans start at just $99.  If your not utilizing a cost saving Cafeteria plan, you should!  Here's why.

Benefits of a Section 125 plan

Why does the government allow section 125 cafeteria plans? The pre-tax dollar incentive provided by section 125 helps both employers and employees control escalating health care costs. Regardless of which type of section 125 plan is incorporated in the business, whether a premium only plan, (POP Plan), medical flexible spending accounts, (FSA), or dependent care flexible spending accounts the tax advantages are the same.

Premium Only Plan (POP)

POP, are designed for employer groups who are interested in reducing employee taxes as well as employer matching FICA taxes. Employees save 22.65% to 35.65% depending on their tax bracket. Employer saves matching Social Security (FICA) or a 7.65% approximate savings. This plan allows employees to make their contributions to group health and group term life insurance with pre-tax dollars. A Premium Only Plan creates no new benefits. The employer is simply offering a way to obtain favorable tax treatment on benefits already offered. Here's how the Premium Only Plan works:

Savings for Employers

Section 125 plans allow businesses to save Social Security (FICA), as well as federal unemployment taxes (FUTA) and generally, state unemployment taxes, on the money employees contribute to their premiums. Employer tax savings can average 7 to 10 percent of employees' contributions. (A tax advisor should be consulted for information on individual state regulations.)

EXAMPLE: An employer shows 20 employees, each contributing $1,200 in pre-tax medical contributions annually.

Savings for Employees

Premium contributions are automatically deducted from employee salaries before taxes are taken out. Because their taxable income is reduced by the amount they contribute, employees pay less taxes on the money they earn. Employees see a savings in their FICA, federal, and, in most cases state, income taxes. When employees become more aware of how they spend money on benefit items, they also tend to practice more cost-containment, resulting in savings for everyone.

EXAMPLE:

Let Advanced Benefits install a Section 125 plan for your group today!

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