HR Glossary

Premium only plan (POP)

Premium only plan refers to the section 125 of the IRS Code, a type of cafeteria plan that allows employees to change taxable cash benefits such as salaries into non-taxable benefits.

what-is-premium-only-plan-pop

Premium only plan definition (POP)

Premium only plan refers to the section 125 of the IRS Code, a type of cafeteria plan that allows employees to change taxable cash benefits such as salaries into non-taxable benefits. They use those benefits then to pay for qualified benefit premiums before any taxes are deducted from their paychecks.

Benefits of premium only plans

1. Lower employer taxes

2. Lower administrative costs

3. Easy to set-up via the payroll system

4. Happier employees

5. Lower employee taxes

6. Lower insurance costs

7. Better health coverage

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