Premium-Only Plans:

"POP" Description: The Tax-Saving Flexible Benefit Plan (Premium-Only Plan Design)

A flexible benefit plan creates additional take-home pay for employees while saving payroll taxes for the employer, simply by converting employee-paid insurance premiums to a pre-tax status.

Converting a taxable expense to a non-taxable expense saves a minimum of about 30%, considering federal, state, and FICA taxes. In other words, for every 3 dollars of taxable expense converted to a non-taxable status, you can take home a free dollar to spend.

A Flex Plan (also known as Section 125 Plan or Cafeteria Plan) gives preferential tax treatment to the employee's share of insurance premiums for employer-sponsored plans.  Examples of  employer-sponsored plans include group medical, dental, or term life and voluntary products (employee-pay-all) such as dental, term life, and cancer insurance.

Like other qualified plans, there are rules to observe, including:

• The plan must be properly adopted by the employer, and supported by a plan document.
• Participants must receive a Summary Plan Description outlining plan provisions.
• Proprietors, partners, and owners of s-corporations cannot participate.
• There are limitations on amounts contributed by key employees (owners and officers).
• The plan must be administered in an audit-compliant manner, with attention to participant eligibility, irrevocable benefit elections, observance of status change rules, etc.

We provide turnkey administration of "Premium-Only Plans", including all the requirements above.  Our administrative services are compensated by fee, without requirement for any product sales or outside commissions.

Our Administrative Services for "POP" Plans:

Plan Setup:

• Proper Plan Design:  (Example: Advising what coverages can/cannot be included in the plan and what practices are/aren't allowed. You wouldn't believe the things we see that are non-compliant!)
• Proper Legal Documents:  (board resolution, plan document, Summary Plan Description)  Also, keeping these current as regulations change, as they have several times in recent years.
• Initial Discrimination Testing:  The primary tests are "Eligibility Test" and "25% Benefit Concentration Test".
• Administrator's Guide:  Provide an online Administrator's Guide, including necessary administrative forms, to include:
  1. Election/Waiver Forms for new participant elections,
  2. Change in Status forms, and
  3. Pre-Tax Premium Notification forms.

Ongoing Administration:

• Tracking Adds/Terminations/Changes:  In all the pre-tax coverages of qualifying benefit plans. This is necessary to re-run the discrimination tests during the year (plans can become discriminatory during the year as people come & go).
• Quarterly Premium Audits:  In cases where the discrimination testing is very close to the limit, we send reports quarterly to the Benefit Administrator to verify on an "as you go" basis that the premium info we're booking is correct.
• Technical Support: ongoing support for the Benefit Administrator on such topics as allowable Changes in Status, leaves of absence, hires/rehires, pre-taxing COBRA payments from last paycheck, etc.