Premium Only Plans are an excellent solution for saving pre-tax dollars on group insurance premiums for many employers. They are ideal for businesses that want to provide some kind of tax benefits for eligible employees without offering a comprehensive Flexible Spending Account Plan. Instead of providing a pre-tax advantage for benefits sponsored by the employer, such as a Health Savings Account or group insurance, a POP is a cost-effective alternative satisfaction of an employer’s legal obligation. However, while it does save on administration costs and reduce payroll taxes, it doesn’t provide benefits and services equal to a standard FlexSystem FSA.
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