Premium only plans (POPs) are a great way for small businesses to save on taxes. Section 125 of the IRS code allows small businesses to make a simple change to the company’s payroll process that reduces employees' taxable payroll. Every employees' premium contribution through a premium only plan (POP) can be deducted from the overall taxable payroll amount.
Here’s 8 benefits small businesses and employees can expect with a Premium only Plan (POP) plan:
- Lower Employer Taxes - Every small business owner needs to take advantage of every tax break they can find. By using a premium only plan (POP), small businesses immediately lower taxes, which means more cash. A reduction in payroll taxes can be quite significant for a small business.
- Lower Administrative Costs - Many group plans feature high administrative costs. With a premium only plan (POP), health benefits costs drop to just $6-12 per employee per month.
- Easy to Set-up - Setting up a premium only plan (POP) is simple and small businesses can administer it online via the payroll system.
- Happier Employees - When employees make more money, they end up happier. By offering employees the ability to use a premium only plan (POP), a small business is automatically putting more money into employees' pockets. Small Businesses can use this to attract and retain quality employees.
- Lower Employee Taxes - In addition to lowering the businesses taxes, employees will also save income taxes with a premium only plan (POP). When they become a member of a premium only plan (POP), they will see a reduction in FICA, federal and state taxes.
- Lower Insurance Costs - For employees who may have trouble making contributions towards their health plan, a premium only plan (POP) plan can allow them to save money on their health plan through the benefits of lower taxes. Even though the premium amounts may be the same as a regular plan, the tax savings that they will experience can help make up the difference.
- Better Coverage - Even though a premium only plan (POP) offers many dollar benefits, it does not skimp on the health benefits. Employees will enjoy full health coverage from a company that they can trust.
- More Take-Home Pay - One of the most popular benefits of a premium only plan (POP) is the ability for employees to take-home more pay each month.