Section §125 (Mini Cafeteria) Premium Only Plan (POP)

Your Employee’s (and dependent’s) contribution  – deduction, the portion they are paying  for your companies group medical premiums can be  tax deductible with a   Premium Only Plan – (POP) which is allowed under  Internal Revenue Code  (IRC) §125 (pdf).

The way it works, is that your company signs up for a POP plan, with an authorized administrator – vendor, often the same Insurance Company that your medical coverage is through, but it doesn’t have to be.  The cost of the plan is in the neighborhood of $135/year.  The administrator sends you a kit and you distribute the forms and have each employee enroll.  The forms do not have to be filed with the government or even the administrator.  You just keep them on file in your company records.

The premiums you as the employer is paying  for Medical Coverage are already tax deductible for the business  and not is reportable as income to the employees under  Internal Revenue Code §106.   The POP plan, allows the portion of the premium that the employee is paying to also be tax deductible.

See below and the brochures on the right for more information.  Feel free to   Email or call us 310.519.1335 for any questions.  Send us your census for Group Health Insurance Quotes

Here’s how it works. 
Brochures and video are in the columns.

Lower taxable income on the employee’s  1040 1040 Lower Income

Same Before and After - Pre and Post Tax
Health Net Brochure

PLUS, the POP will  lower  the employER’s  payroll taxes such as FICA FUTA, Medicare Tax, Income Tax Withholding US Code 26 C 21, Publication 535Publication 15-A State Disability Insurance (SDI) and possibly Worker’s Comp.


To start your companies POP Plan, just review the brochures, complete the application and return to us.  The administrative process and fees (around $150/year) are  nominal.  It’s a WIN/WIN for both employER, employee and the  dependents.

HCR (Health Care Reform) IRC §125 (f) (3) narrows the definition of qualified benefit to exclude Individual Coverage offered through the Exchange – Covered CANotice 2013-54 cuts off employer reimbursement outside of exchange too.


Health Net

How it works Info Sheet

Application 1-888-595-2261 tasc

Blue Cross

POP 125 Brochure

Sterling HSA


 Participant Collateral

UHC – PacifiCare

POP Savings Calculators

POP FICA Savings Calculator

Deduction & Payroll Calculator

Pay Check City –  Video Instructions @ 2.16 minutes Instant EmployER Quotes


Broker ONLY

MHM Agent Guide

POP Health Net
Flex Systems
Blue Cross POP Brochure
Blue Cross POP
UHC POP plan
Sterling HSA
Sterling HSA
Ceridian POP Fica Savings Calculator
Ceridan POP FICA Calculator
Pay Check City
Pay Check City POP Calculator

4 comments on “Section 125 – Employee Contribution – Deductible

  1. Are all employers who provide health insurance benefits REQUIRED to have a Sect 125 POP plan?
    The health insurance benefit premiums could be fully or partially subsidized by the employer.

    • No. What makes you think that a POP 125 plan is required for all employers?

      A POP plan allows the portion paid by the employee to be tax deductible. Here’s a excerpt of the Blue Cross brochure, cited above:

      A P.O.P. is a simple, IRS-approved change in your payroll process that allows you to use pre-tax salary dollars to pay your employees’ share of benefit premiums. Any size employer can take advantage of this special provision of Section 125 of the IRS code.

      As a result, both employers and employees profit. Employees reduce their taxable income, which lowers
      their taxes and increases their take-home pay. You cut your payroll taxes by decreasing your total taxable payroll. Everybody wins – and saves.

      Are you thinking of a full Section 125 cafeteria plan, that offers a full array of benefits, like adoption assistance, child care assistance, life insurance, health savings accounts, flexible spending?

    • Thanks for your question. I guess this page wasn’t as understandable as I thought. I’ve rewritten the introduction to make the POP concept easier to comprehend. Let me know if more clarification is needed.

Leave a Reply

Your email address will not be published. logo