Ashley is PrimePay`s service assistant. In this capacity, she supports PrimePay`s administrative services in the areas of social benefit management, cobra administration, non-discrimination testing, ACA and ERISA. In addition, a pop-dense is subject to non-discrimination testing requirements, although POPs have a safe haven that allows them to automatically meet multiple components in standard discrimination testing. However, in order for the employer to comply with the pre-tax treatment of insurance premiums, the company must have a plan document in accordance with section 125 of the code, which means that you need a plan document in accordance with section 125. This tax saving generally covers more than the costs of developing and managing a plan. In addition, employees are happy because they see an “increase” in reducing withholding tax. Sponsoring a cafeteria plan can be your answer. A cafeteria plan allows for pre-tax health pay deductions and other types of benefits. But don`t worry. While cafeteria plans may contain multiple power components, it can be as simple as a high-end plan (POP). Did you know that? PrimePay offers free POP if you sign up for one of our pre-taxation plans.
The written plan must be in place – signed by the employer with the description of the summary plan and the voting forms copied to employees – before making pre-tax deductions. Qualified benefits are defined as “not excluded from the worker`s gross income” (see section 125 (f)). In other words, premiums are tax-exempt within a POP plan or cafeteria. Employers also achieve tax savings from tax cuts on all income funds of tax-benefiting workers. A Section 125 Premium-only Plan (POP) is a cafeteria plan that allows employees to pay their health insurance premiums with tax-exempt dollars. Traditionally, POP plans are used in combination with employer-sponsored group health insurance. However, employees can also use POP plans to pay individual health insurance premiums with tax-exempt dollars. Read also: Fixed Sickness Compensation in Subject Cafeteria Plans A Section 125 Premium Only Plan allows your employees to voluntarily consent to a “salary reduction” so that the employer can pay its insurance premium as an operating expense.
And for only $30 more, you can add the HSA module for additional tax savings for the employee and employer. These benefits include group health insurance and supplementary benefits such as group life insurance, specific health insurance, accidental death insurance and others. According to the National Conference of State Legislatures (NCSL), implementing and managing a POP plan under Section 125 costs about $100 per year per employee. Here are three things you should know about these plans. The use of a section 125 POP for the payment of insurance premiums benefits both employers and their employees. Are you an employer that offers after-tax health insurance and wonders how you can restructure your performance plan to better help your employees? For an additional $50, employers can choose the Deluxe Binder option, which contains the pdf version and a plan document printed in a 3-ring book (shipped by USPS). With federal income tax alone, workers save up to 40%. Under a POP plan, the amount paid by an employee for his or her premium is taken “before tax” before the FICA inugx or income tax.