A POP Kit (Premium-Only Plan) is a simple, IRS-approved change in the payroll process that allows employers to use pre-tax salary dollars to pay employees’ share of benefit premiums. Any size employer can take advantage of this special provision. As a result, both employers and employees profit. Employees reduce their taxable income, which lowers their taxes and increases their take-home pay. Employers cut payroll taxes by decreasing your total taxable payroll. Everybody wins – and saves.
What is a POP Kit?
- It is a Flexible Benefit Program that enables employers to allow their employees to pay their share of health premiums with pre-tax dollars.
- POP Plans are often referred to as premium only cafeteria plans.
What types of health premiums may be put in a POP Plan?
- Group Term Life
- A D & D (Accidental Death & Dismemberment)
- Disability (If premium is taken pre-tax, benefit is taxable)
- Who needs a POP Plan?
- Employers who want to do cost shifting because of rising health cost
- Employers who want to save on payroll taxes
- Employers who want to give their employees a benefit that will save them taxes
Who may not participate in a POP Plan?
- Partners in a partnership
- 2% Shareholders in a sub chapter S corporation, including relatives through the attribution rules, such as a spouse, child or parent
- Sole Proprietors
Partners or Proprieters in a LLC or PLLC treated as a partnership or proprietorship
What services are required for a POP Plan?
- Written Plan Document & Summary Plan Description
- Annual Discrimination Testing
- Enrollment Forms
- Federal Updates
- Annual 5500 (Tax Return), when applicable
As an employer, you may be worried about the costs and time associated with setting up and running a POP Plan. SASI can help!
SASI has more than 20 years’ experience and proven processes in place to reduce the cost and administrative burden for clients. SASI takes care of all of the administrative duties, recordkeeping, and legal compliance involved to ensure your plan is a success. SASI focuses on making sure our clients plans operate smoothly, effectively and at as low a cost as possible.
To set up a POP plan for your company, contact SASI today at (800)-752-3539