Admin America will include a Premium Only Plan whenever we help you design and implement an FSA program for your employees.

The US Congress created Code Section 125 in an effort to make benefit programs more affordable for employees. Section 125 is part of the IRS Code that allows employees to convert a taxable cash benefit (salary) into non-taxable benefits.

The Premium Only Plan (POP) is the building block of the Section 125 Plan. POPs allow for certain employee paid group insurance premiums (i.e., Health, Dental, Vision, etc.) to be paid with pre-tax dollars. The POP is a tremendous opportunity for you to enhance your benefits package.

Employer Advantages:

• Lower payroll taxes means more company funds can be used for other business needs
• Increased employee satisfaction
• Simple and quick plan set-up
• No monthly or annual renewal fee

Employee Advantages:

• More take-home pay
• Reduced taxes

Admin America POPs are:

  • Customized to meet the needs of each individual customer – we don’t believe in “one size fits all” plans
  • Portable from carrier to carrier; the customer owns the plan – not the carrier
  • Compliant with all federal laws; our documents are designed by our full-time attorney

Who Can Participate in a POP?

Employees of regular corporations, S corporations, limited liability companies (LLCs), partnerships, sole proprietors, professional corporations, and not-for-profits can all reduce payroll taxes by establishing a Section 125 POP. While the Code prohibits a sole proprietor, partner, members of an LLC (in most cases), or individuals owning more than 2% of an S corporation from participating in the Section 125 POP, owners may still benefit from the savings on payroll taxes by sponsoring the plan for their employees.

How do employees benefit from participation in a POP?

Employees can often realize 30% – 40% in tax savings because contributions to a POP are exempt from payroll taxes. The actual tax savings are on state and federal income taxes, including Social Security and Medicare taxes on all money employees use to pay for their portion of insurance premiums. Under a Section 125 POP, employees take-home pay is increased which helps reduce the high cost of providing health coverage for family members. Of course actual savings will vary depending upon the employee’s tax situation.

How do employers benefit from offering a POP to their employees?

Employers also realize savings by offering a POP to employees. About 10% tax savings is a good estimate as a result of lower Social Security, Medicare, Federal and state unemployment and, worker’s compensation taxes, depending on the state. The savings adds dollars to the employer’s bottom line.

What type of insurance premiums can employees pay for with pretax dollars?

The following benefits can be paid for on a pretax basis:

  • medical insurance
  • dental insurance
  • vision insurance
  • critical illness
  • accidental death/dismemberment
  • group term life insurance (up to $50,000 in coverage).

Disability premiums can be paid for on a pretax basis but any benefits received from the policy will be taxable to the employee.

Can employees sign up for the Premium Only Plan at any time?

No. Employees must sign up when they enroll for health and/or dental insurance. They may also enroll during the Open Enrollment period. Many employers automatically enroll newly eligible employees in the POP.

Are there any limitations?

You need to be aware that enrollment in the POP reduces the Social Security Tax withheld, so Social Security benefits at retirement may be slightly affected.  Participation in pre-tax premium plans also limit the changes that can be made to a health and dental plan during the plan year.

Click on the document link below to open our new POP Application to complete and submit to Admin America for setup of a new plan. If you have questions or need assistance please contact our Sales Department directly at 678-578-4644 or email

POP Application