Insurance Agent Forum

[Imladris]

The title's pretty self-explanatory.

Could someone explain the difference in a premium only plan and a "true section 125" plan?

[LGilmore]

Premium only is "only" about payroll deduction for premiums on a pre tax basis. A true 125 can contain aspects of payroll deduction for day care and out of pocket medical expenses. This usually involves reinbursements to employees after they have paid an out of pocket cost. Much, much more bookkeeping involved in a true 125.

One is very simple, the other involves more paperwork and time throughout the plan year.

[Delta76]

Good explanation above. To make it even simpler, the only time you will use a POP plan is if the employer pays the premiums directly to a company. It's a document that's drafted and thats it.