The Process of Acquiring and Maintaining a Tax-Free Premium Only Plan
Over the last few years, IRS section 125 premium only plans (POP) have grown in reputation as an effective, cost-saving healthcare strategy. As their popularity has grown, state and Federal legislature has turned to the IRS provided POP as a means Best WordPress gpl club download through which to increase the affordability of sponsored healthcare throughout the United States. At least 4 states currently require the use of a premium only plans for businesses sponsoring health care and more than 13 promote POP plan subscription through State sponsored tax-credits/breaks and assistance. While private small and large businesses can subscribe to a premium only plan on their own volition, acquiring tax-free savings on employee premium contributions, few reportedly know the process through which to go about acquiring a POP. As employers of all stratums of businesses can benefit from the use of a premium only plan, a brief summary of the process through which companies acquire POP savings will assist employers as they seek to strengthen the financial integrity of their sponsored health insurance programs.
Initial filing procedures for IRS premium only plans require a series of specific required administrative documents to be completed. First and foremost, a plan document must be generated. The POP plan document relates specific plan details including: thorough description of covered employee benefits, participation policies and ordinances, annual contribution limits, election procedures, employee eligibility and employer premium contribution. The plan document also defines the beginning and end of the accepted plan year.
Employers must also provide a summary plan description (SPD) to all POP participants. The SPD explains specific POP plan nuances, detailing claim filing procedures as well as information relevant to POP sponsorship and administration. The SPD must be filed with the Department of Labor within 120 days of the decided POP plan effective date and must be distributed to all POP participants within 90 days of employee participation.
Once the premium only plan filing procedures are in place, employers may begin deducting their employee premium contributions before regular state and Federal taxes are withdrawn. Employees will see a swift take-home pay increase ($100-$300 per month) and employers will accrue savings of 7.65% on all matching FICA taxes.
POP plan maintenance will be required throughout the year, however, as Federal and State laws change along with evolving company information. Failure to correctly apply any of the steps involved with the POP plan subscription process, from initial filing procedures to continued plan maintenance, will compromise the integrity of your plan and may result in not only a loss of tax-free premium contributions but may bring stiff Federal penalties down on company finances; it is for this reason that it is strongly recommended employers use a POP plan service provider as they seek to acquire premium only plan tax-free savings.