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EZPOP (Premium Only Plan)
At last! You can offer a benefit that will save you more than it costs!
Watch our five-minute EZPOP video
One simple change saves taxes for you and your employees.
If your employees pay for insurance through payroll deduction, the EZPOP
(Premium Only Plan) is an easy way to save taxes.
Under a Premium Only Plan, which is regulated by Section 125 of the
Internal Revenue Code, employees will save an average of 30% on insurance
premiums they deduct from their pay. That’s because your Premium Only Plan
allows premiums to be deducted on a pre-tax basis. You, the employer, also
save about 7.65% (the FICA match) on every dollar your employees deduct.
It works by making one simple adjustment in your payroll process—an
employee’s share of insurance is deducted from gross pay before taxes
are calculated.
Who can oer a Premium Only Plan?
Premium Only Plan can be established by any employer. Qualied employers
include corporations, s-corps, partnerships, LLCs, sole proprietors,
professional corporations, and not-for-prots. Related employers also qualify,
including members of controlled groups or aliated service groups.
Although certain “owners” may sponsor a plan for their employees, they will
not be personally eligible for tax savings through payroll deduction. Individuals
that are not eligible include, sole proprietors, partners, members of an LLC
(in most cases), or individuals owning more than 2% of an s-corporation. The
same rule applies to a spouse or dependent that works for that employer.
A Premium Only Plan is easy to install. So, you can start saving
taxes immediately!
You can start your Premium Only Plan at any time. You even can start your
Premium Only Plan mid-year and then cut it short to align with your insurance
renewal. So, why wait? The choice is yours.
A Premium Only Plan will make your benets better!
You take credit for a new benet that will increase take-home pay.
Your employees can share in more premiums without reducing
their take-home pay.
The money employees save can be used for additional voluntary benets.
Your FICA tax savings will help defray the cost of insurance rate increases.
Group health insurance
Voluntary insurance benets like dental, vision, critical illness, cancer,
and hospital indemnity
Group-term life insurance (up to $50,000)
Health Savings Account contributions
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EZPOP (Premium Only Plan)
A Premium Only Plan increases employee take-home pay
A Premium Only Plan is Easy to Implement
Plan implementation.
The Premium Only Plan can more than pay for itself. The
program is convenient because WageWorks takes care of
the paperwork for you.
When you enroll for the service, you’ll receive a signature-
ready, customized Premium Only Plan Implementation and
Administration Kit containing:
Plan Adoption Agreement
Plan Document
Certicate of Resolution
Summary Plan Description
Brochures for employees and election forms
Video that explains the Premium Only Plan to you, your
employees, and your bookkeeper/controller
Instructions on signing documents and distributing forms
Instructions for maintaining your Plan
Simplied explanation of payroll adjustments
Annual salary $30,000 $30,000
Annual pre-tax insurance payroll deductions 0 - $2,400
Taxable salary $30,000 $27,600
Estimated taxes
(federal, FICA, and state) - $9,195 - $8,460
Annual after-tax insurance payroll deductions - $2,400 0
Take-home pay $18,405 $19,140
Increase in take-home pay 0 $735
A Premium Only Plan reduces employer payroll taxes
Annual payroll (10 employees) $300,000 $300,000
Annual pre-tax insurance payroll deductions 0 - $24,000
Taxable payroll $300,000 $276,000
Annual Social Security tax (7.65% employer FICA match) $22,950 $21,114
Your annual Social Security tax savings 0 $1,836
Calculate the tax savings you can realize with a Premium Only Plan
Your total monthly employee premium contributions $
Multiply by FICA tax rate of 7.65% x .0765
This is your monthly FICA tax savings $
Multipy by 12 months x 12
This is your annual tax savings with Premium Only Plan $
Annual compliance service.
Once your Plan is established, you will receive complete
administrative support services from WageWorks, a leading
provider of consumer-directed benets.
Annual Compliance Services include:
Prior to each new plan year, you will receive an Annual
Compliance Packet. The update packet will include
re-enrollment materials and signature-ready Plan
documents, forms, and procedures.
The latest documentation required for keeping your Plan
in compliance with IRS Regulation changes.
Free assistance with non-discrimination testing (upon
Quarterly newsletter with compliance tips and reminders.
Continued access to our Premium Only Plan Compliance
Support Unit by phone: 800-876-7548, or by email:
www.EZP OP.com
Will a Premium Only Plan Benefit You?
Take the following Section 125 checkup to nd out.
1. Do you currently deduct your employees’ portion of qualied health insurance premiums on a pre-tax basis
through a Section 125 Plan?
2. Do your employees contribute toward the cost of the company’s major medical insurance or other health,
dental, or vision insurance?
Is your business a partnership, LLC, sole proprietorship, or s-corporation?
If you answered “yes” to question 1, skip to the next section to see if your plan is in compliance.
If you answered “yes” to question 2, you and your employees may benet from implementing a
Section 125 Plan. You could save on payroll taxes, such as FICA, and your employees could save on
federal income tax, FICA tax, or where applicable, state or local income taxes. If you answered “no,
you probably don’t need a Section 125 Plan at this time. However, consider implementing a Plan if you
intend to start requiring your employees to contribute toward their health insurance costs.
If you answered “yes” to question 3, the owner, partners, members of an LLC, or greater than 2%
shareholders of an s-corporation, or their spouse and dependents, cannot participate in the plan.
However, you may still implement a Section 125 Plan for your employees. If you answered “no,” all
employees may participate in the Plan subject to the non-discrimination rules.
My company has a Section 125 Plan.
Take the following quiz to see if your Plan is in compliance.
1. Do you have a written Plan document in your les?
2. Have you properly amended your Plan to reect any changes that you made to the plan year, eligibility
requirements, benets, IRS Regulations, or the Aordable Care Act? (There have been recent changes
in IRS Regulations.)
Have your employees received a copy of the current Summary Plan Description?
4. Is the total of all benets for key employees in the Plan no more than 25% of the total of all benets in
the Plan?
5. Do you have current signed election enrollment forms on le for all eligible employees?
6. Do you require all election changes to be made only during the open enrollment period each year unless
the employee has experienced a valid change in status as outlined in the latest Section 125 Regulations?
7. As your new employees become eligible for participation in the Plan, do you require that they complete
enrollment forms?
8. Do you have documentation on le to support annual non-discrimination requirements?
Are the premiums for all policies that include a “cash value” or a “return of premium” benet deducted
on an after-tax basis outside of the Section 125 Plan?
If you answered “no” to any of these questions, your Plan may be out of compliance. The Internal
Revenue Code provides for signicant penalties for failure to comply with these requirements. The
severity of penalties depends on the severity of the infractions. You may want to consult with your tax
professional and/or WageWorks, Inc. regarding your non-compliance risk.
Yes No
Yes No
EZPOP (Premium Only Plan)
WageWorks internal use: Client No. ______________________Rep. No. __________________________ Lead Source: WageWorks- ___________________ IRS Form W-9 on File
WageWorks (NYSE: WAGE) is a leading provider of Consumer-Directed Benets (CDBs) in the United States. WageWorks
administers and operates a broad array of CDBs, including pre-tax spending accounts, such as health and dependent
care Flexible Spending Accounts (FSAs), as well as Commuter Benet Services, including transit and parking programs,
Health Savings Accounts (HSAs), Health Reimbursement Arrangements (HRAs), Premium Only Plans, and other
employee benets.
© 2014-2015 WageWorks, Inc.All rights reserved. Throughout this document, “savings” refers only to tax savings. No part of this document constitutes tax, nancial or legal advice.
Please consult your advisor regarding your personal situation and whether this is the right program for you. 3111 (01/2015)
1. Plan Sponsor (Employers complete legal name) (“Client”) __________________________________________________________________________________________
2. Business type Corporation S-Corp. Sole Proprietor Partnership LLC Not-for-Prot Government Religious
3. Federal Employer Identication Number (must be nine digits.)
4. Employer’s principal oce: This Premium Only Plan shall be governed under the laws of the State Commonwealth _____________________________
5. Legal name(s) of aliated company(ies) that will be covered by this Plan
6. Eective date of the Plan (check one)
a. A new Section 125 Premium Only Plan eective as of (date) ______________________
b. An amendment and restatement of an existing Section 125 Plan (transfer of Premium Only Plan from your current administrator)
(1) Effective date of original plan _______________________
(2) Eective date of amended and restated plan _______________________
The eective date should be the beginning of the rst payroll period for which employee contributions will be converted to pre-tax. It is not necessary for the eective date to coincide with the rst day of the Plan Year (short
Plan Years are permitted in the rst Plan Year). Per IRS Regulations, all employee communication/election information must be distributed and the plan document must be signed prior to the eective date.
7. Plan year: The rst plan year for this Premium Only Plan will be a (check one)
a. 12-consecutive-month period beginning (date) ______________________ and ending (date) ______________________
b. Short plan year beginning (date) ______________________ and ending (date) _______________________
The Plan Year usually coincides with the renewal date of the insurance plan, calendar year or company scal year.
8. Benets: All benets listed below may be included in the Premium Only Plan, whether you currently oer them or not.
Health Insurance premiums, including major medical, accident, cancer and critical illness, dental, vision, and hospital indemnity. However, insurance
products with a return-of-premium feature cannot be deducted on a pre-tax basis.
Group-term life insurance (up to $50,000 including any employer provided coverage)
Health Savings Accounts contributions that are made through payroll deduction
Disability insurance (although most tax advisors would advise against this because any disability benets received would be taxable to employees)
9. Total number of employees _____________________
SECTION B: ADMINISTRATOR (Indicate the name and address of the person within the company responsible for plan administration. The application should be signed by an authorized
representative of the company. Reminder: Please do not start pre-tax deductions until you have received the Administrative Kit and signed the Plan Document from WageWorks.)
Plan administrative contact ____________________________________________________ Title _____________________________________________________________
Mailing address (No PO boxes) _____________________________________________________________________________________________________________________
City, State, Zip ____________________________________________________________________________________________________________________________________
Phone _________________________________________ Fax ___________________________________ Email _________________________________________________
WageWorks will be the plan service provider, but will not be the Plan Sponsor or Plan Administrator. This Agreement will become eective on the “Eective Date of the Plan.” It will continue for an initial term of one year
beginning with the Eective Date, or the Amendment and Restatement Date, and continue thereafter for successive one-year terms (“Renewal Terms”) or until terminated by either party upon 90 days prior written notice.
The one-time Implementation Fee must be enclosed with this Application. For each Renewal Term, Client agrees to pay an Annual Compliance Service Fee billed at the end of each Plan Year.
Implementation Fee $ _____________________ (call for quote)
Annual Compliance Service Fee $ ______________________ (billed at the end of each Plan Year end)
Client signature ________________________________________________________________________________________ Date ______________________
This Application and Implementation payment must be received by WageWorks at least 15 business days prior to the Eective Date.
Check enclosed for $ _____________________ (payable to WageWorks, PO Box 870725, Kansas City, MO 64187-0725)
Charge my credit card for $ _____________________ VISA MC AMEX Discover Expiration date ______________________
Credit card number _____________________________________________________ Name on card ____________________________________________________
Name of referral source ______________________________________________________ Aliated company ________________________________________________
Address (No PO boxes) _____________________________________________________________________________________________________________________________
City, State, Zip ____________________________________________________________________________________________________________________________________
Phone ______________________________________ Fax _______________________________________ Email ________________________________________________
The referring company or its representative may earn a fee for services performed in connection with the implementation of this plan.
Scan and email this completed form to EZPOP@wageworks.com or FAX to 877-769-0173
Questions? Call 800-876-7548 (Weekdays, 8 a.m. – 5 p.m. Central)
EZPOP (Premium Only Plan Application)
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