Section 125 Premium Only Plan Document

By implementing a pop plan an employer is allowing employees to pay their portion of the employer health insurance premiums with pre tax dollars saving employees up to 40 on income taxes alone.

Section 125 premium only plan document. Section 125 pop document. The portion of the insurance premium the employee is responsible for is deducted right off the top of income before taxes are calculated. Section 125 i provides that a health fsa is not treated as a qualified benefit unless the cafeteria plan provides that an employee may not elect for any taxable year to have salary reduction contributions in excess of 2 500 made to such arrangement 3.

Premium only plan effective april 1 2014. The qualified premiums if offered by employer are. Section 1 2 purpose the purpose of the plan is to provide participants with a choice between cash and certain qualified nontaxable benefits as defined in section 125 of the internal revenue code.

Our automated and real time updates make staying in compliance a breeze. The penalties for non compliance as many employers may be well aware by now a premium only plan pop or section 125 allows employees health insurance premiums to be deducted with the use of pre tax dollars thereby resulting in substantial tax savings for both parties. The plan is intended to qualify as a cafeteria plan under section 125 of the code so that optional.

We help you stay in compliance many companies have a section 125 pop plan document on file but it is out of date. It allows for certain employee paid group insurance premiums to be paid with pre tax dollars. A section 125 premium only plan document allows your employees to voluntarily agree to a salary reduction so that the employer can pay their insurance premium as a business expense.

October 11 2019 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. A premium only plan contains limited language of the section 125 plan that only allows for eligible benefit premiums and hsa health savings account contributions to be withdrawn from payroll on a pre tax basis. There are many advantages of setting up a premium only plan for employees.