What does POP stand for?
Premium Only Plan

What is a POP plan?
A Premium Only Plan allows employees to pay their portion of insurance premiums on a pre-tax basis through payroll deductions. If an employee establishes a Health Savings Account (HSA), contributions will also be deducted from payroll [an employee's HSA contributions will be subject to California state income taxes].

Click here to view Tax Treatment of Cafeteria Plans - Final regulations.

A POP falls under what section of the IRS code?
Section 125. Final regulations available here.

What is the difference between a full blown Section 125 Plan and the Shared Benefits Plan (SBP)?
The SBP contains language of Section 125 that allows for eligible benefit premiums and HSA contributions to be withdrawn from payroll on a pre-tax basis.

A full Section 125 Cafeteria Plan allows for eligible out of pocket expenses to be deducted from payroll on a pre-tax basis for Flexible Spending Accounts (FSA) and dependent child care. But, the full blown Section 125 Plan includes the Premium Only Plan language with the eligible benefit premiums. It is generally more expensive to obtain and administer.

Can more than one company be covered under a single POP?
If multiple companies have Common Ownership and apply the same eligibility guidelines then they may be covered under a single POP.

What is included in Bancover's service?
As part of our service you are provided with:

  • The Plan Document 
  • The Summary Plan Description 
  • Waiver Forms & HSA Enrollment Forms
  • Compliance Updates. Any time there is a change to the law that requires your plan document to be changed, we will revise the document and send it to you at no additional charge.

Why should I renew annually?
As laws change, your SBP will become out of date and it will be necessary to revise your document. Instead of worrying about tracking the law yourself, Bancover will do it for you and provide a revised document at no additional charge.

What happens if an employer has an out-of-date POP and continues to deduct premiums on a pre-tax basis?
The amount of money being deducted on a pre-tax basis will be considered taxable income and the employer may face penalties. The IRS may impose penalties of up to $110 per day per employee.

When does non-discrimination testing apply to a POP?
At the end of every plan year.

Who is responsible for conducting the employer's non-discrimination testing?
For the Bancover SBP, the employer is responsible for the non-discrimination testing.

In what ways does an employer and employees save in taxes?
By lowering the employees’ taxable income, both the company and employee saves on the taxes paid. If you would like to calculate how much your company or your company employees can save, please go to EmployER Savings or EmployEE Savings.

What benefit premiums are eligible for pre-tax payroll deduction?
The following benefit premiums may be deducted on a pre-tax basis:

  • Medical 
  • Dental
  • Vision
  • Life
  • Accidental Death & Dismemberment
  • Disability

Who may not participate in a POP?

  • Owners of an S-Corporation owning more than 2% (and their spouse, parents, children, and grandchildren) 
  • Partners in a partnership
  • Members of an LLC 

When should the Waiver of Participation Form be completed by an employee?
If the employee does not have any premiums to deduct or they wish not to contribute their premiums on a pre-tax basis.

Is there an additional fee for the Health Savings Account module?
No. The HSA module is included at no additional cost.

May an employer contribute to their employees HSA accounts without a POP?
Yes, but the contributions have to be made to all employees on a “comparable” basis. Special rules apply.

May an employee contribute to their own HSA without a POP?
Yes, they may write a personal check to fund their own HSA (without using payroll deductions). They would not save the 7.65% on FICA taxes, but they could still deduct their contributions on their year-end Federal tax return.

If an employee chooses to participate in a POP, may they change their mind later?
Only if they meet strict guidelines. A change in Family Status is a common exception that would allow an employee to change their elections, but the requested change must be consistent with their change in Family Status.

May an employee decline to participate in the POP and instead receive additional money in his paycheck?

How do you sign up? 
Complete the Employer Application & Adoption Agreement.  Click here for the set up process.

What is the deadline for submitting the Employer Application & Adoption Agreement?
The signed documents must be received prior to the requested effective date.

What do I need to do once I have my plan documents?
Once you receive your plan documents, keep them on file in the case of an audit. Also make sure to distribute the Summary Plan Description (SPD) to all employees. You will be provided a check list that walks you through step-by-step.