Premium Only Plan definition

An American initiative, developed through IRS Code section 125 by Congress, is a way to reduce the cost of benefits programmes to employees. Section 125 allows employees to convert taxable cash benefits, such as salary, into non-taxable benefits i.e. money is taken off their salary for the benefits gross of income tax.

The premium-only plan allows qualifying employees to pay their group insurance premiums out of their gross pay. POPs are typically used for health-related benefits including dental, vision, cancer, hospital indemnity and accidents.