Premium Only Plan

(POP) (Section 125)

Internal Revenue Code Section 125 makes premium-only plans possible. This section was established by the United States Congress to make benefits more affordable for participants. Commonly known as Cafeteria Plans, Section 125 plans have become one of the fastest-growing fringe benefits offered. 

Cafeteria Plans provide several tax benefits for employers and employees. Participants can choose qualified insurance coverage and pay the premiums with pretax dollars. These amounts are deducted from gross earnings before taxes are applied, effectively lowering the taxable income when paying for qualified insurance premiums in this manner.

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