My BESTflex Premium Only Plan (POP)

What is a Premium Only Plan (POP)?

A Premium Only Plan (POP) allows an employer to withhold health plan premiums on a pre-tax basis from their employees’ payroll checks. POP plans are also referred to as cafeteria plans or Section 125 plans. Relevant health plan premiums include medical, dental, vision, and life. Pre-tax HSA contributions are also made possible by the POP.

When you have a BESTflex POP, Employee Benefits Corporation is your service provider. For the BESTflex POP, we:

  • Provide and maintain the legal plan documents required by the IRS for this plan. (Employers need the Plan Document to allow pre-tax payroll deductions for health plan premiums.)
  • Perform the required nondiscrimination testing at the end of the plan year with information you provide to us.
  • Provide ongoing administrative support for compliance, technical, and customer service needs, including plan changes.

The employer is solely responsible for setting up pre-tax payroll payments and contributions. The POP simply makes these pre-tax payroll deductions compliant.

How does the POP save my company and employees money?

The health plan premium payments and pre-tax payroll contributions made through a POP are exempt from Federal, State, and FICA payroll taxes.

  • Employers save approximately 7.65% because they do not have to pay FICA/FUTA taxes on the amounts.
  • Employees save approximately 30%*, making a $100 eligible expense cost the employee about $70.

A premium only plan (POP) allows employers to withhold health plan premiums from their employees’ payroll checks on a pretax basis, which saves money.

What do I have to do to maintain this benefit?

The POP operates on a plan year and renews annually (and it can renew on a different schedule than the medical plan). The primary contact listed for your benefit plan receives the following communications to facilitate maintenance and renewal of the plan. If you haven’t received these notifications and you believe you should be the contact for your organization, you can update the contacts listed on your plan using the Update Contacts Form.

If your plan renews on January 1:

Timeline Approx. Date Communication Actions to Take
90 Days Prior to Renewal Sept 3 POP Nondiscrimination Testing Notice Email We send you an email when it's time to complete and submit the Nondiscrimination Testing Worksheet. Then we’ll complete the required IRS testing to help you keep your plan in compliance with regulations.
30-60 Days Prior to Renewal Oct 15 POP Renewal Notice Email
  • Log into your employer account. If you forgot your password or user name, use the options on the login page to reset your account.
  • Access My Company Plan and review your plan setup to make sure all pre-tax benefits are listed with their accurate renewal dates.
  • If no changes are needed, simply pay the invoice when you’re notified it’s ready.
  • If changes are needed, reach out to us and we’ll assist you in amending your plan.
45 Days Prior to Renewal Nov 15 POP Fee Notice Email Log into your employer account, view your Fee Invoice, and make the payment.

What is Nondiscrimination Testing?

Nondiscrimination tests are a series of tests required by the Internal Revenue Service (IRS) to determine if a cafeteria plan favors select individuals. All employers who offer pre-tax benefits, regardless of business type or size, are required to perform annual nondiscrimination tests or hire a third party to conduct testing on their plan. If the employer does not comply with annual nondiscrimination testing, they could be subject to taxes and penalties.

Employee Benefits Corporation gathers information from the employer and then performs the required testing on their behalf. The best news—this service is included in the annual fee for the BESTflex POP.

5 Steps to Complete the Nondiscrimination Testing Worksheet

We send you an email when it’s time for you to complete and submit your Nondiscrimination Testing Worksheet. Our POP clients say this worksheet typically takes them 20-30 minutes to complete, with some saying they may need to follow up with a colleague to verify 1-2 data points.

  1. Log In! Access the worksheet by logging in to your employer online account.
    • Forget your password? Simply follow the prompts on the screen to reset it.
    • Need someone else to do this work? Complete the Update Contacts Form.

  2. Download the Worksheet. Once you’re logged in, access the menu, look for the Resources section, and click Forms and Materials.
    • Click BESTflex Premium Only and you’ll see a list of documents.
    • You’re looking for the Nondiscrimination Census Excel Worksheet. Click the name of the document to download it.

  3. Learn! The first tab of the workbook provides you with detailed instructions and training resources.
    • If you’re new to nondiscrimination testing or if you could use a refresher, watch our video on how to use the worksheet to successfully share your information.
    • We provide a nondiscrimination testing worksheet in Excel format with data validation to help you provide the information we need. We encourage you to “Enable Content” to use the data validation features.
    • Is Excel not compatible with your organization’s technology? Reach out to us at the contact information listed in your employer online account.

  4. Enter the Data. Now that you’re in the know, enter the data for your organization. Save your worksheet and the data validation will prompt you to correct any errors.

  5. Submit! Once everything is looking good, save again and upload the worksheet by secure upload through your employer online account.

What are the legal plan documents for a POP?

Employee Benefits Corporation provides employers with the Plan Document to meet the IRS requirements for a POP. The Plan Document is available in the Forms and Materials section of your employer online account.

For convenience, we also create My Company Plan, which clearly outlines the employer’s specific plan, and the BESTflex POP Summary Plan Description, which offers a thorough consumer-friendly description of the POP. These documents are available to the employer in their online account for reference. While not required for the POP, the employer may choose to distribute these documents to new employees once they become eligible or to all employees during open enrollment to help them understand the plan details.

Do I need a POP?

In order to continue deducting any premiums or plan contributions on a pre-tax basis for any employee, the employer needs to maintain a POP with a relevant legal Plan Document and perform annual nondiscrimination testing.

When you have a BESTflex POP, Employee Benefits Corporation provides you with a legal Plan Document, helps you update it when needed, and performs your annual nondiscrimination testing based on information you share. All for a competitive annual fee.

If you’re looking at your POP options, consider the following:

  • Will you continue to deduct premiums or plan contributions pre-tax? A POP is required to continue these deductions.
  • Are you able to write and maintain legal plan documents (with the legally-required information) and perform annual nondiscrimination testing on your own or do you have a contract with another vendor to do so? These functions are necessary for a POP.

When should the BESTflex POP be terminated?

When you have chosen to:

  • Discontinue any pre-tax premiums or plan contributions.
  • Contract with another vendor to provide legal plan documents, perform annual nondiscrimination testing, or if you choose to do this testing yourself.

If you wish to terminate your BESTflex POP, the contact at the employer needs to send a written request, including the following information. Note that requests from the broker cannot be honored.

  • The type of plan you are terminating (Premium Only Plan).
  • Termination effective date. Please make sure that you provide an end-of-month date.