P.O.P. and ERISA plans

What is a P.O.P. plan?  

P.O.P. stands for Premium Only Plan and refers to one of a handful of options an Employer can offer to Employees that give them tax benefits.  Under Section 125 of the Internal Revenue Code, Employers can set up a plan that allows Employees to pay pay for certain benefits on a PRE-TAX basis.  These can include:

        * Premiums for health and dental and vision benefits paid by the Employee

        * F.S.A. benefits - a Flexible Savings Account that allows employees to set aside money Pre-Tax to be used for any Unreimbursed Medical Expenses (including what they pay towards a Deductible, coinsurance, Dr. or RX copays, as well as vision and dental out of pocket costs.)

        * Day-care services

        * Travel reimbursement 

PREMIUM ONLY PLAN, abbreviated:  P.O.P.  is when an Employer chooses to ONLY offer the first option:  Premiums for insurance paid on a pre-tax basis/ 

These plans are typically set up by a T.P.A. (Third Party Administrator) and not set up by an insurance agent, broker, accountant, or payroll service.  However, some payroll services have expanded services, and you should ask them if they offer this.  However, some payroll companies like to bundle a number of services together that include the P.O.P. and many other services that you might not need.  So it behooves you to shop! 

You may want to compare prices with a T.P.A. that will just set up the P.O.P. and/or include an ERISA plan document as well.  For more info on the rules and regulations on these plans, click the link below for the FAQ IRA page that gives you all the details. 

Our office can recommend a T.P.A. out of Madison, WI called TASC - visit their website at:  www.tasconline.com 

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What is an E.R.I.S.A Plan? 

ERISA stands for the Employee Retirement Income Security Act and was passed into law in 1974.

Many Employers (and brokers, unfortunately) believe that this law ONLY replies to Retirement plans such as a 401k or SEP plan.  NOT TRUE!!!

This law actually covers ANY Employer Sponsored group benefit plan, including health insurance, dental, vision, and other benefits.  The law requires Employers to have a plan document and make it available upon request to employees.  NOTE:  An SBC (Summary of Benefits and Coverages) will not suffice!  

We recommend you seek counsel on setting up a plan if you offer any type of Employer-sponsored benefits program, such as a group health plan.  

You can search the internet for companies that set up ERISA plan documents, or talk to the folks at TASC.  TASC ERISA plans

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