Premium ONly PLan

A Premium Only Plan (POP) is a plan that allows premiums for group insurance to be deducted from an employee’s paycheck on a pre-tax basis, saving both the employer and employee FICA taxes of 7.65% of the contributions.  The employer may have a reduced unemployment tax liability.  Employer contributions are treated as a business expense.  The employee reduces his or her federal income tax liability and in most cases state income tax liability.  The types of insurance that are allowed in a POP include:   

  • Accident

  • Cancer

  • Dental

  • Disability (not recommended since benefits are taxed if premiums paid with pre-tax dollars)

  • Group term life for non-dependent (up to $50,000)

  • Group health

  • HMO

  • Vision