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Premium Only Plans (POP)

Premium Only Plan’s  - At A Glance

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

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.