CompleteMarkets
With over 76 years of experience, The Jordan Insurance Group is an industry leader in Life Insurance strategies and Employee Benefits. We strive for excellence through our due diligence in selecting products to satisfy our clients’ needs with proven benefit designs and tax strategies. Our Team utilizes a diversified multi-level approach in preserving, protecting and growing wealth for our business and individual clients.
Benefits of Purchasing POP
Offering employees solid health benefits is one of the hallmarks of a good employer, and setting aside money for them to use on health or other benefits on a pre-tax basis really ups your game. If you don't want to provide a full flexible spending account to your employees but would like to offer them a way to pay for medical expenses on a pre-tax basis, a premium only plan (POP) might be for you. A cheaper cafeteria plan than the Flexible Spending Account (FSA), a Section 125 POP covers a variety of benefit types, including the standard medical, dental and vision as well term life insurance and disability (although this last is not recommended by experts such as Cafeteria Plan Advisors). Other possible benefit types include prescription, cancer, Medicare supplement, hospital indemnity and accident. Although premium payments are made by the employee, the employer's sponsorship ensures payments are made on a pre-tax rather than post-tax basis, saving both employees and employers considerable amounts. When you purchase a POP, you not only reduce your payroll taxes, you receive a 7.65 percent reduction in FICA taxes by saving the matching Social Security (6.20%) and Medicare (1.45%) taxes. Often the tax savings cover the entire cost of administering a premium only plan. Employees also appreciate the move, since it saves them money by reducing their taxable salary and increasing the amount of money they take home at the end of the day. They may save as much as 40 percent on their federal income taxes, reducing the cost of purchasing adequate health coverage. Not only that, but spending pre-tax dollars allows them to increase the benefits they can procure for spouses and dependents, which improves their standard of living overall. Premium only plans are also relatively easy to set up, administer and remain in compliance with. They are overall a low-effort and high-savings choice for smart businesses that care about employees. Source: http://www.cpa125.com/Premium%20Only%20Plan.htm
William Jordan
Other articles by: William Jordan
This content has not been rated yet.