Premium Only Plans

What is a Premium Only Plan (POP)?

• A benefit program that permits payment of an employee's portion of medical care premiums on a pre-tax basis
• Offers the employee a choice between cash and one or more non-tax qualified benefits
• Does not discriminate in favor of key and highly compensated employees

What types of health premiums may be in a POP?

• Medical
• Dental
• Vision
• Prescription
• Group Term Life
• Accidental Death and Dismemberment (AD&D)
• Membership in an association with "free choice" medical services or group hospitalization and clinical care
• Cancer
• Disability

What services are required for a POP?

• Written Plan Document
• Summary Plan Description
• Written Plan Ammendments
• Annual Discrimination Testing
• Payroll instructions
• Enrollment and change in status forms
• Federal updates as necessary
• Plan year must be 12 consecutive months; a short plan year is allowed for valid business purposes

Who may not participate in the pre-tax benefits of the Premium Only Plan?

• Self-employed including sole proprietors, partners in partnerships and directors of corporations (Spouses of the sole proprietors and partners may participate in the program as long as they are an employee of the company.)
• More than two percent shareholders in a sub chapter S corporation (Grandparents, parents, spouses, children and grandchildren of the shareholders are deemed to own what the shareholder owns and may not participate in the plan.)
• Officers or partners in LLCs & LLPs are treated as partnerships