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PREMIUM ONLY PLANS (POP)
Premium only plans allow you to pay for certain employer deducted insurance premiums with tax-free dollars. By simply electing to participate, your employer will begin to deduct your premium before the computation of Federal, State and FICA taxes, and that amount will not be reported as income for W-2 wages.
WITHOUT PARTICIPATION
IN CAFETERIA
$1,000 GROSS SALARY/W-2 INCOME
-300 TAXES (STATE, FED, SOC. SEC.)
700 NET CHECKS
-100 INSURANCE &/OR OTHER EXPENSES
$ 600 NET SPENDABLE INCOME
WITH PARTICIPATION
IN CAFETERIA
$1,000 GROSS SALARY
-100 INSURANCE
900 NET CHECKS/W-2 INCOME
-270 TAXES (STATE, FED, SOC. SEC.)
$ 630 NET SPENDABLE INCOME
As you see from the above illustration, by placing your insurance premiums under the plan, your premiums will be deducted before your paycheck is taxed, increasing your take-home pay, and reducing your reportable income. This will work the same if you participate in dependent care or unreimbursed medical.
What insurance products are eligible to pre-tax? Health, Dental, Vision, Accident, Dreaded Disease, Hospital Confinement, Life Insurance (up to$50,000, for employee only), AD&D. There are other variations of the above products that may also be eligible, if offered by your employer.
Can I change my elections anytime? You cannot drop or change your coverage once the plan year has started, unless you have a qualifying status change.
Some plans require participation when you payroll deduct eligible insurance products. Please refer to your plans Summary Plan Description (SPD), or contact us with questions.
