Section 125 Premium Only Plans, sometimes referred to as POP Plans, reduce income tax liabilities for both the employer and employee. This is because IRS Section 125 allows employees to make special salary deduction elections to pay their portion of medical insurance premiums using pretax or tax-free dollars.

How Employees Benefit from a Section 125 Premium Only Plan. Employees save 22.65% to 40% of their pre-tax Section 125 premium deductions in just federal income taxes alone. The actual tax savings are on city, state, and federal income taxes, including Social Security and Medicare taxes on all money employees use to pay for their portion of insurance premiums. Under a Section 125 POP employees take-home pay is increased which helps reduce the high cost of providing health coverage for family members.

How Employers Benefit from a Section 125 Premium Only Plan. Employers benefit by reducing the matching Social Security and Medicare taxes, and sometimes Federal and State unemployment taxes. Depending on the state, employers may also be eligible for worker’s compensation savings. They cost around $125 a year.

Give me a call today so that we can discuss the details of your situation and send you a customized quote. You can also email us at johnbaskett@sbcglobal.net