Section 125 Plans (POP)
Help reduce your FICA, federal, and state and local taxes for your company and your employees by combining a section 125 premium only plan (POP) and flexible spending account (FSA) with your company’s group health insurance. At Paychex, we handle much of the work required to start and manage section 125 plans so you can enjoy the benefits.
What Sets Paychex Section 125 (POP) Plans Apart
Launch Your Section 125 Plan
Paychex helps you establish and manage your POP and FSA plans with important legal documentation, compliance testing, and status reports to help keep administration on track.
Integrate a Section 125 Plan with Your Paychex Payroll
Offering a section 125 plan through Paychex provides the benefits of integration with Paychex payroll. This makes plan administration easier while maximizing the accuracy of the data entered into the system.
Establish an FSA for Your Section 125 Plan
We help set up your FSA, process claims daily, and provide the legal documentation, compliance testing calculations, and reports to properly maintain your plan.
Access our Enrollment Support and Section 125 Plan Resources
Promote your POP and FSA plans with enrollment emails, flyers, and a poster, as well as a useful booklet and worksheet detailing how to enroll, the amount that employees may contribute, and debunking common misconceptions about the plans.
Provide Employees with More Flexible Plan Options
Give employees more flexibility in how they can use their FSA funds by choosing a plan design that allows participants to carry over up to $550 into the next plan year or a grace period until March 15 of the following plan year.
Give Employees Convenient Access to Funds
Employees can use their Paychex Benefit Account debit card to access funds and pay for eligible items and services.
Receive Reimbursements with Quick Claim Processing
Reimbursements are sent Monday through Friday, and participants receive regular status reports and reminders.
Check Balances and Manage Plans on the Go
The Paychex Benefit Account mobile app, online portal, and toll-free FSA Information Line make account management easy, no matter where you are.
Find the Answers You Need
Our toll-free section 125 support line is staffed by professionals highly trained in POP and FSA plans, their limits, and their benefits. They’ll be glad to answer any question you have.
Increase Section 125 Plan Savings with a Flexible Spending Account (FSA)
An FSA lets employees set aside pretax funds each year to pay for qualified medical expenses, such as:
- Prescription drugs
- Over-the-counter items
- Copays and deductibles
- Eyeglasses/contact lenses
- Chiropractic care
- Child/dependent care
- Non-cosmetic dental procedures
- Orthodontia
- Acupuncture
- Psychiatric care
POP and FSA Tax Savings Calculators
See how much your business could potentially save in taxes with a Premium Only Plan (POP) and a Flexible Spending Account (FSA).
Employee FSA Tax Savings Calculator
Use this calculator to see the potential tax savings of your FSA and estimate how much you should plan to contribute based on your spending.
Payroll Integration Sets Our Voluntary Insurance Plans Apart
Our voluntary insurance plans seamlessly integrate with our payroll technology, Paychex Flex® allowing for a smooth transfer of data between payroll and benefits. We make plan management simple, allowing you to automatically deduct premiums from Paychex payroll with a single employee record.
Other Products to Consider
In addition to section 125 plans, Paychex offers a wide range of solutions designed to help simplify your complex business needs.
Frequently Asked Questions
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What is a section 125 plan?
What is a section 125 plan?
With a section 125 plan or cafeteria plan, employees can pay qualified medical, dental, or dependent care expenses on a pretax basis, which reduces their taxable income as well as the employers Social Security (FICA) liability, federal income and unemployment taxes, and state unemployment taxes where applicable.
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What qualifies as a section 125 plan?
What qualifies as a section 125 plan?
Two common types of section 125 plans are:
- Premium Only Plan (POP) A POP allows you and your employees to pay insurance premiums with pre-tax dollars. Together with group health insurance, a POP reduces taxable income and results in a reduction in the amount used to determine your company’s FICA (Federal Insurance Contributions Act) and FUTA (Federal Unemployment Tax Act) payroll taxes and any applicable state taxes.
- Flexible Spending Account (FSA) Offered in conjunction with a group medical plan, an FSA helps employees use pretax deductions to budget for out-of-pocket medical and dependent care expenses, for things such as prescriptions, copays and deductibles, elder care, and daycare.
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What benefits are included in section 125 plans?
What benefits are included in section 125 plans?
Section 125 plans can be used to reimburse you and your employees for qualified expenses related to your company’s medical plan coverage, dental and vision coverage, and for dependent care.
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Do I need a section 125 plan?
Do I need a section 125 plan?
It’s up to you to decide if a section 125 plan makes sense for your company and your employees. Some of the benefits of section 125 plans include:
- Employee tax savings
- Reduction in employer payroll and tax liabilities
It’s important to consider all aspects of section 125 plans in order to make the choice that is right for you.
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Who cannot participate in a section 125 plan?
Who cannot participate in a section 125 plan?
In general, the following individuals are not allowed to participate in section 125 plans:
- A non-employee
- Self-employed individual
- Partners in a partnership
- Members of an LLC
- More than 2% shareholders in a subchapter S corporation
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How do I set up a section 125 plan?
How do I set up a section 125 plan?
Paychex helps you establish and manage your POP and FSA plans with important legal documentation, compliance testing, and status reports to help keep administration on track.
Premium Only Plan (POP) Tax Savings Calculator
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Paychex FSA Tax Savings Calculator
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