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What is a Premium Only Plan?

A Premium Only Plan (POP) is a salary reduction plan that allows employees to pay group insurance premiums on a pre-tax basis.
A POP may also be called a Section 125 Premium Only Plan, Cafeteria Plan or Welfare Plan.

POP Benefits

  • Employee's tax savings help to offset the cost of insurance premiums.
  • Employees don't pay FICA, federal, or where applicable, state and/or local taxes on money used to pay for their portion of employer-sponsored insurance premiums or contributions to their Health Savings Account (HSA).
  • Employers’ taxable payroll is reduced by the total amount of employee contributions for benefits. Lower taxable payroll benefits Employers and Employees. 
  • Employers can increase their employees' share of insurance premiums without negatively affecting their take-home pay.
  • Employers provide employees the benefit to an increase in their take-home pay. 

POP Requirements

POP plans are governed by Section 125 of the IRS tax code. Employers with a POP plan are required to have:

  • A current Summary Plan Description (SPD) available to all plan participants
  • A current POP Plan Document

Watch how easy it is to create a POP document

POP documents created on EnsuredCompliance® include both the required SPD and Plan document, are fully compliant and take minutes to create.

Learn how EnsuredCompliance can help you

POP documents are one of the document types available on the EnsuredCompliance platform. Our unique solution allows you to input the required data and generate a customized fully compliant document within minutes.

"EnsuredCompliance produces a very professional branded document. Ease of use is number 1! Also, RTO's support is stellar!"

Joni Horvath

Flexible Benefits and COBRA Supervisor at J.W. Terrill

JW Terill

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