The Premium Only Plan (POP) offers employers and their employees great tax benefits. An employer can offer a tax-favored option to employees and at the same time lower the employer's payroll taxes. A POP plan doesn't really create new benefits. Instead, under IRS Section 125, it allows employees to pay any premium contributions for certain employee benefits with pre-tax dollars.
Groups can save their employees 15–40% of their premium contribution for their insurance benefits.
How It Works
Allied provides the required tax documents and assistance, free of charge, for an Allied group health plan or large ancillary group (26+). For smaller ancillary groups, we'll provide the documents for a small charge (only $50 a year).
When an employee signs the pre-tax document, premium contribution amounts are automatically deducted from their salary before taxes are calculated, which lowers the income amount.
Once the pre-tax income is lowered, the group will contribute less to Social Security and Medicare payroll taxes. State taxes also may be lowered if the state recognizes POP plans.