Contributions to POPs

Are employers required to contribute toward the coverage offered through its Section 125 POP plan?

No. Contributions may be made solely by the employee.

How much can I contribute to a POP plan?

For medical expenses, an employer and the Section 125 plan administrator set a limit that can be contributed to the Section 125 plan account. There are no set limits as defined by the IRS. There is a cap for dependent care set at $5,000 per family per year. How will the POP affect my gross earnings on my W-2?

Your wages on your W-2 will reflect the tax-free deduction of your healthcare premium. Box 1 of the W-2 excludes any premiums paid with tax-free income under a Internal Revenue Code Section 125 Premium Only Plan. For example, if your gross salary was $25,000 and your tax-free deduction for the POP was $1,000, then your gross wages on your W-2 will be reported as $24,000.

Does a POP affect contributions to a retirement plan?

Retirement plans should be amended, if necessary, to include POP contributions as compensation for purposes of the contribution. The result is that POP will have no negative affect on retirement plans.