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Premium Only Plans (POP)

Premium Only Plans  - At A Glance

Plan Documents
Whether you need a complete set of "Wrap" documents for your Section 125 plan, or are looking for Premium-Only Plan documentation, FBA has a dedicated team that can provide support and answer your questions.  Our team uses internal and external resources to stay current on industry and regulatory updates, using the latest document management tools to prepare required documentation to keep your company within compliance guidelines.

Premium Only Plans, or POPs, offer:
-- Salary reduction that allows employees to pay for eligible group insurance premiums on pre-tax basis
-- Provides a simple payroll change that results in tax savings for both the employee and employer group

Plan Documents provided by FBA will include:
-- Summary Plan Descriptions
-- Plan Documents
-- Adoption Agreement
-- "Wrap" language to incorporate all Section 125 benefit programs

An IRS Section 125 Flexible Benefit Plan allows employees to pay for benefit premiums with pre-tax dollars. This is often referred to as Premium Conversion or Premium Only Plan (POP). Examples of premiums that can be deducted from the employees' paychecks on a pre-tax basis are as follows:

  • Health Insurance
  • Dental Insurance
  • Vision Insurance
  • Disability Insurance
  • Group Term Life Insurance
  • Accident Insurance
  • Cancer Insurance
  • Other Voluntary Benefits

 

Non-Discrimination Testing

A non-discrimination test must be performed when implementing a Flexible Benefit Plan. Employers must also consider the ownership of the company and determine who may participate. For instance, in a Subchapter S Corporation, anyone who is a more-than-2% shareholder, or a member of an LLC, cannot participate in the pre-tax benefit plan.

Under IRS regulations, Section 125 plans (also known as Cafeteria Plans) benefit from favorable tax treatment.  As such, there are certain non-discrimination rules in place to ensure that these plans do not favor highly-compensated or key employees over other classes of employees.  As an optional service, FBA can provide non-discrimination testing for Section 125 plans to ensure these plans are within compliance guidelines and recommend improvements if necessary should a benefit program not meet the requirements.

• Our standard testing packages include the 25% Pre-Tax, or Section 125, Concentration test and the Dependent Care 55% Concentration Test. 
• Additional testing available includes Group Term Life and Self-Funded Plan Testing
• If you are interested in a quote for testing services, please reach out to our team.