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Manage Benefit Costs with a Section 125 POP Plan

With the rising costs of health care and the down economy. more and more small businesses and companies are having a tough time providing the same health benefits as before. But there's actually an easy solution that can help employers like you offer employees their much-need benefits and make them happy without taking on extra cost This is where you could use a Section 125 POP Plan.

What is a Section 125 Plan?

A POP plan is the most simple type of Section 125 plans or cafeteria plans. ?POP? means ?premium-only plan.? When you sponsor a Section 125 Plan for your employees in the organization, you give them the advantage of being able to avail of benefits including health, dental and vision, and group life insurance and pay for these pre-tax.

How Does It Help With the Cost?

A Section 125 POP plan deducts benefit premiums from employee paychecks on a pre-tax basis. This essentially lowers the employee's taxable income. Consequently, FICA and Medicare costs go down as well. In the end, the cost of the health benefits turn out to be much cheaper when ran under a POP 125 than if employees had purchased it on their own post-tax. Having to pay for their benefits or at least putting in their share of the expense won't need to be such burden to employees because the tax savings has already offset a big chunk of the cost.

You may also include voluntary benefits in your cafeteria plan without needing to spend more. But the best thing is, you still get to see some tax savings as employer as long as the benefits are offered under a Section 125. This is important as health insurance gets more expensive, forcing you to shift more and more health care costs to your staff. Health care costs of the future will be much more a shared responsibility and the tax savings on the part of the employee is the same as a raise, only through your Section 125 it comes from Uncle Sam.

The employer's tax savings may vary with location or state however, with a reduction in the employee's taxable income, the employer will see a matching reduction in his share of FICA , Medicare, and federal unemployment taxes, and the percentages of these may differ from state to state. You can also get to see some savings from state and local payroll taxes, as well as for workers' compensation. With so many tax costs that will see a dip, the savings can really be substantial.

But Isn?t It A Hassle?

It won't be if you elicit professional help from a POP plan advisor. Setting up and maintaing a Section 125 plan can be hassle-free if you have a team of experienced tax advisors who can help you with all the documentation requirements needed. And believe it or not, expenses related to plan administration can be cost-effective and not too expensive.

Don't miss out on the tax savings that a Section 125 POP plan offers! Visit our site and find a reliable and cost-effective way of getting your POP Plan documents ready and updated all the time.

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