Section 125 Pop

However the plan itself isn t insurance.

Section 125 pop. A section 125 premium only plan pop is a cafeteria plan which allows employees to pay their health insurance premiums with tax free dollars. Code where the treasury irs lays out the rules for employers wanting to allow employees the option of pre tax salary deductions to pay group health and related insurance premiums. Irs code section 125 allows an employer to set up a premium only plan pop where an employee s insurance premium contributions can be deducted from his or her payroll on a pre tax basis.

Traditionally these pop plans have been used in combination with employer sponsored group health insurance plans. There are many advantages of setting up a premium only plan for employees. The name section 125 plan pop derives from title 26 section 125 of the united states tax code.

A section 125 premium only plan pop and flexible spending account fsa also known as cafeteria plans can reduce fica federal and state and local taxes for your company and employees when combined with your company s group health insurance. The formal definition of a section 125 plan to pre tax benefits says. A premium only plan can include a cash in lieu of benefits provision for employees who don t want coverage under the group plan.

You still have to offer group health insurance separately. It defines the term cafeteria plan and describes the types of benefits such a policy may include.