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Small Business Employee Benefits and HR Blog

Section 125 POP - Reimbursable Health Insurance Premiums

Section 125 Premiums ReimbursableA Section 125 Premium-Only-Plan (POP) is a cafeteria plan that allows employees to pay their health insurance premiums with tax-free dollars. Since 2009, employees have been able to use POP plans to pay individual health insurance premiums with tax-free dollars.

Using Section 125 POP to pay for insurance premiums benefits both employers and their employees. Several states actually require Section 125 plans for certain employers, and other states have enacted specific regulations without requirements. Be sure to check your state’s regulations.

The following individual health insurance premiums are eligible for reimbursement under a Section 125 Premium Only Plan:

  • Major medical individual health insurance premiums
  • Limited benefit individual health insurance premiums
  • Dental care and Vision care premiums 
  • Qualified Ancillary premiums (e.g. accident policies)
  • Medicare Part A or B, Medicare HMO, and employer-sponsored health insurance premiums
  • Medicare Advantage and Supplement premiums
  • COBRA premiums

*Note: Long Term Care Premiums are not reimbursable by a Section 125 POP plan.

More About Section 125:

What is a Section 125 POP?

Section 125 POP Rules & Regulations 

Section 125 Premium Only Plan Definition 

8 Benefits of a POP Plan for Small Business 

Learn the differences between HSAs, HRAs, and FSAs

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