Section 125 / POP Plans

[JosephDeacon]

I have used Ceredian in the past to admin POP and 125 plans, at a nominal fee to the client per year.

I know that AFLAC will do this for free, as long as you offer or write a product.

Any other options?

 

[ABC]

Not really.
I also use Ceridian when the client wants an actual legal documentation showing they have a 125 in place.

If you write group health for assurant they will set up the 125 for free.

Most payroll companies will set them up for a fee.

Aflac loves setting up 125's and they will even do it illegally. I have seen them set up 125's and put Individual health premium list bills in there.

There is a lot more legality to 125's than people think.

When in doubt have the client pay the $300 to have it setup correctly.

 

[stuy119]

Aflac loves setting up 125's and they will even do it illegally. I have seen them set up 125's and put Individual health premium list bills in there.

Why isn't that allowed? The TPA I use does this as well ... as do various others.

 

[Sam]

We also use Tasc and Primepay

 

[Justin Bilyj]

Can anyone go into this more, what is a 125?

 

[MrMack]

Can anyone go into this more, what is a 125?

It is a section of the IRS code. You can go to the IRS website and type in Section 125 and get a lot of information.

 

[Full Throttle]

Can anyone go into this more, what is a 125?

Think of it like an umbrella of the tax code, that has many different components under it. A business can pick and choose what specific components they want to include. Here are a few examples of different components to pick and choose from:

-Ability for an employee to pre-tax certain group insurance benefits. For example, an employee pays a portion of their group health plan premium, a 125 plan allows the employee to avoid paying those premiums with after-tax dollars. Up to $50,000 of life insurance can be pre-taxed, disability insurance (although it may not make sense), accident plans, dental, vision, HSA contributions, ect. This is the most commonly used benefit under the umbrella. If this is the only option selected, it is commonly refereed to as a Premium Only Plan (POP).

-Employees can pre-tax qualified daycare expenses.

-Employees can pre-tax certain transportation expenses.

-Employees can pre-tax individual health insurance premiums that are not group based.

-Employees can pre-tax certain medical expenses they pay out of pocket. This is typically referred to as Unreimbursed Medical Expenses and carries the "use it or lose it" provision.

All these different provisions can be drafted into the legal document created (the Section 125 plan document). AFLAC will draft a POP plan for free, but some agents tell clients they have more sections covered under the umbrella than is actually allowed in the document. I've seen it many times.

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[ABC]

Why isn't that allowed? The TPA I use does this as well ... as do various others.

In some corporation Owners are not eligible for the section 125 benefits.

Technically you can not list bill individual plans in a section 125 because that would place them into a qualified group benefit plan. If someone got declined coverage they could show damages.

 

[WBS]

Colonial will also do a POP plan for free thru Ameriflex