Section §125 (Mini Cafeteria) Premium Only Plan (POP)
Employee Contribution – Non Taxable!
POP – Introduction
If your employee’s (and dependent’s) are contributing to your group health plan, their contribution-deduction from their paycheck, for your companies group medical premiums can be tax deductible with a Premium Only Plan – (POP 125) Mini Cafeteria Plan. Internal Revenue Code (IRC) §125 * html .
Lower taxable AGI – Adjusted Gross Income on the employee’s 1040
PLUS, the POP will lower the employER’s payroll taxes such as FICA * FUTA, * Medicare Tax, * Income Tax Withholding US Code 26 C 21, Publication 535Publication 15-A * 26 U.S. Code § 125 – Cafeteria plans * State Disability Insurance (SDI) and possibly Worker’s Comp. About.com
The way it works, is that your company signs up for a POP plan, with an authorized administrator – vendor, see the links below and on the sides, it’s often the same Insurance Company that your medical coverage is through, but it doesn’t have to be. The cost of the 125 plan is in the neighborhood of $135/year. The administrator-vendor sends you a kit and you distribute the forms and have each employee enroll. The forms do not have to be filed with the government or even the administrator. You just keep them on file in your company records.
The premiums you as the employer is paying for Medical Coverage are already tax deductible for your company is not reportable as income to the employees under Internal Revenue Code §106. The POP plan, allows the portion of the premium that the employee is paying to also be tax deductible, above the line as it lowers Adjusted Gross Income.
To start your companies POP Plan,
Just review the brochures, complete the application and return to us. The administrative process and fees (around $150/year) are nominal. It’s a WIN/WIN for both employER, employee and the dependents.
ACA/Obamacare HCR (Health Care Reform) IRC §125 (f) (3) narrows the definition of qualified benefit to exclude Individual Coverage offered through – Covered CA. Notice 2013-54 cuts off employer reimbursement outside of exchange too.
- Section 125 POP PDF Document by CoreDocuments.com VIDEO
- What is Section 125?
- Do I need a Section 125 Plan Document for my business?
- How well do free ‘fill-in’ plan document templates work?
- How much do employees save?
- Does a plan bring the employer any tax breaks?
- Who can participate?
- What is a “cafeteria plan”?
- Can I add a health FSA, dependent care FSA, or Health Savings Account?
- Do I have to start a Section 125 plan on January 1?
- What comes with a comprehensive plan document package?
- How do I set up a new Section 125 plan?
- When does a plan document need to be updated?
- How do I order a Core 125 Plan Document package customized for my benefit plan?
- Is there a video on Section 125 plans?
- Where can I find additional resources?
Links & Reference Material
I’m doing research on using 125 plans for employees who purchase individual insurance, and found your website very helpful, so I thought I would share the following legal analysis of mine, which might be helpful to others:
Mark A. Hall, J.D.
Professor of Law and Public Health
Wake Forest University faculty/profile
EDD California Employers Guide #DE44
- Forms & Publications EDD
- More workplace protections in 2022 New laws will shield employee health, safety and wages, but some ‘job killer’ bills were axed Los Angeles Times
- dir.ca.gov/faq_minimum wage
- shouse law.com/minimum-wage-law
- Employing Family Members Publication # DE 231
- dir.ca.gov/faq_overtime exemptions
- FORMS REQUIRED TO GIVE NEW EMPLOYEES
- Health Insurance Enrollment
- Rivera Employment Law
- EDD New Hire Registry
- Form W-2, Wage and Tax Statement Employer Files on behalf of employee
- Fringe Benefit Overview
- Cafeteria Plans
- Simple Cafeteria Plans for Small Businesses POP Plans?
- Accident and Health Benefits
- Accident or health plan.
- Group-Term Life Insurance Coverage
- Health Savings Accounts
- Avalara Tax Compliance Guide for Business 2022 151 pages