Premium Only Plan

What Does Premium Only Plan Mean?

The Premium Only Plan (POP) is an initiative established by the U.S. Congress and added to IRS Code Section 125. Its purpose is to make premium payments for group benefits more affordable for employees. The POP allows employees to use pre-tax dollars from their salaries to pay the premiums for their benefits programs.

Insuranceopedia Explains Premium Only Plan

The Premium Only Plan (POP) enables employees to save on taxes by using pre-tax income to pay premiums for employer-sponsored insurance. It is commonly used to cover premiums for health insurance, dental insurance, and hospital indemnity plans. Because POP applies directly to premiums for employer-sponsored health coverage, it is one of the more practical ways employees can lower their health insurance costs without switching plans or reducing their coverage. For employers, setting up a POP is also a low-overhead way to make group benefits more attractive to staff when small business insurance costs are already a meaningful line item in the budget.