Premium Only Plans
PREMIUM ONLY PLANS (POP)
Premium only plans allow you to pay for certain employer deducted insurance premiums with tax-free dollars. By simply electing to participate, your employer will begin to deduct your premium before the computation of Federal, State and FICA taxes, and that amount will not be reported as income for W-2 wages.
CAFETERIA PLAN ILLUSTRATION
WITHOUT CAFETERIA PLAN
$1,000 Gross Wages/W-2 Income
-300 Taxes (State, Fed & FICA)
-100 Insurance/Other Expenses
$600 Take Home Pay
WITH CAFETERIA PLAN
$1,000 Gross Wages
-100 Insurance & Other Expenses
$900 Net W-2 Reportable Income
– 270 Taxes (State, Fed & FICA
$630 Take Home Pay
By Participating Your Take Home Increased By $30.00
*Because of the reduction in Social Security taxes, participation in the Cafeteria Plan could reduce Social Security benefits.
What insurance products are eligible to pre-tax? Health, Dental, Vision, Accident, Dreaded Disease, Hospital Confinement, Life Insurance (up to$50,000, for employee only), AD&D. There are other variations of the above products that may also be eligible, if offered by your employer.
Can I change my elections anytime? You cannot drop or change your coverage once the plan year has started, unless you have a qualifying status change.
Some plans require participation when you payroll deduct eligible insurance products. Please refer to your plans Summary Plan Description (SPD), or contact us with questions.