Section 125 - Premium Only Plans

Section 125 is an Internal Revenue Code. The code consists of three elements - a premium only plan, a health flexible spending account, and a dependent care flexible spending account. For the purposes of this program (saving you money relative to your group health plan), we will focus on the Section 125 Premium Only Plan (or POP).

A POP enables employees to pay their portion of qualifying insurance premiums on a pre-tax basis. So your employees pay less in Federal Income Tax, State Income Tax (in most states), and FICA. And you (the employer) reduce your matching FICA contribution, and in many cases FUTA, SUTA, and Workers' Compensation as a result of the reduction in payroll.

POPs are inexpensive (less than $200 for most employers) and easy to maintain.