Pre-Tax Group Insurance: How POP Plans Help Employers and Employees Save

epiainsurance
11 minutes ago
2 min read

Offering group health insurance is a strong foundation for any employee benefits strategy.

A POP plan (Premium Only Plan) allows employees to pay their portion of group health insurance premiums on a pre-tax basis, rather than after taxes.

This structure is permitted under Section 125, which allows certain benefit payments to be excluded from taxable income when set up correctly.

In simple terms, everyone saves money:

Employees may reduce their taxable income
Employers may reduce payroll tax liability
The underlying health insurance plan remains unchanged

POP plans don’t replace group insurance — they enhance how it’s funded.

How Pre-Tax Premiums Create Value

When employee premium contributions are deducted before taxes:

Employees often experience higher take-home pay, even though their gross salary stays the same
Employers may see lower payroll-related taxes, including Social Security and Medicare contributions

This creates a win–win outcome that improves benefit value without adding new expenses.

Why Employers Should Consider This Option

✔ Cost Efficiency

Reducing taxable wages can result in measurable payroll tax savings over time.

✔ Stronger Benefits Perception

Employees tend to value benefits more when they see a real impact on their paycheck.

✔ Competitive Positioning

For small and mid-sized businesses, offering pre-tax benefits helps level the playing field with larger employers.

✔ No Plan Redesign Required

This approach does not require changing carriers or benefit levels — it focuses on how premiums are paid.

What Coverages Are Included

This structure applies to employee contributions toward:

Group medical insurance
Dental insurance
Vision insurance
Group-term life insurance coverage
Accident and disability coverage

It is one of the most commonly adopted and straightforward benefit enhancements available to employers.

Why Employers Rely on EPIA

While the concept is well-established, proper setup and coordination are essential.This is where EPIA’s experience matters.

Our team works with employers to:

Evaluate whether this structure aligns with their current benefits strategy
Provide clear quotes and explanations based on the employer’s group plan
Guide implementation in coordination with payroll and benefits partners
Support ongoing administration and employee communication

Rather than presenting this as a standalone technical change, we integrate it into a broader benefits strategy — ensuring clarity, consistency, and confidence.

A POP plan is not a new trend — it’s a proven approach that many employers still overlook.

If your company already offers group health insurance, reviewing how premiums are structured could be one of the most practical improvements you make to your benefits program this year.

A professional policy review can quickly determine whether this option is right for your business.

📞 +1 626-912-1988📧 info@epiagroup.com🌐 www.epiagroup.com