POP vs Full Cafeteria Plan Comparison
What Is a Premium Only Plan (POP)?
A Premium Only Plan, or POP, is the most basic form of a Section 125 Plan. It allows employees to pay for insurance premiums—such as medical, dental, and vision—with pre-tax dollars.
It’s called “premium only” because that’s all it covers. There are no flexible spending accounts (FSAs), dependent care benefits, or additional wellness perks included.
What POP Plans Cover:
Medical insurance premiums
Dental and vision premiums
Supplemental insurance (if allowed)
COBRA premiums (in some cases)
What POP Plans Don’t Cover:
Health FSA contributions
Dependent Care FSA (DCAP)
Other pre-tax benefit perks like telemedicine or identity protection
What Is a Full Cafeteria Plan?
A Full Cafeteria Plan goes beyond premiums. It offers a broader range of pre-tax benefits that employees can elect based on their needs.
This type of Section 125 Plan includes:
All the premium pre-tax savings of a POP Plan
Health FSA (Flexible Spending Accounts)
Dependent Care FSA (DCAP)
Wellness-related add-ons like telemedicine, ID theft protection, travel club access, and more
Customizable benefit bundles tailored to your workforce
A Full Cafeteria Plan is ideal for employers who want a more robust and competitive benefits package—and higher overall tax savings.
Side-by-Side Comparison
Here’s a simple breakdown of how these two Section 125 Plans compare:
| Feature | POP Plan | Full Cafeteria Plan |
|---|---|---|
| Pre-Tax Insurance Premiums | Yes | Yes |
| Health FSA | No | Yes |
| Dependent Care FSA (DCAP) | No | Yes |
| Add-On Wellness Benefits | No | Yes |
| Simpler Administration | Yes | Slightly more setup |
| Greater Tax Savings Potential | Limited | High |
| Requires Nondiscrimination Testing | Yes | Yes |
Which Plan Is Right for You?
Let’s break it down based on your business goals, budget, and size.
Choose a POP Plan If:
You only offer basic insurance (medical, dental, vision)
You want a fast, simple setup
You’re a small business (2–10 employees)
You need to reduce payroll taxes this year with minimal cost
Your employees aren’t asking for FSAs or wellness add-ons
POP Plan Pros:
Low cost
Easy to set up and manage
Saves ~7.65% on all pre-tax premium dollars
IRS-compliant with minimal admin work
POP Plan Cons:
Limited savings opportunity
Fewer options for employees
Less competitive benefits offering
Choose a Full Cafeteria Plan If:
You want to offer FSAs or Dependent Care FSAs
Your workforce values expanded benefits
You’re scaling and want long-term savings
You want to bundle perks like telemedicine, travel, or pet care
You’re recruiting in competitive industries
Full Plan Pros:
More ways to save on payroll taxes
Supports flexible, modern benefits
Helps retain and attract talent
Ideal for companies offering multiple benefit types
Full Plan Cons:
Requires more documentation
Slightly more complex to administer (we handle this)
Must ensure benefits are nondiscriminatory
Not Sure Which to Choose? Let Us Help
We’ve helped thousands of employers find the right plan for their size, goals, and team preferences. Whether you’re starting with a POP or ready to launch a full cafeteria plan, we’ll guide you step-by-step.
- Want to compare costs side by side?
- Curious about your total payroll tax savings?
- Need help understanding what’s included?
We’re here to answer every question—no pressure, no sales pitch.
Disclaimer: Section 125 Solutions LLC does not provide legal, financial, or tax advice. We connect employers with qualified third-party administrators for compliant Section 125 Plan setup and management.
Compare and Calculate Your Tax Savings
Not sure which plan gives you the best return? Use our free calculator to estimate your payroll tax savings with a POP Plan or Full Cafeteria Plan.
Use it to:
See side-by-side tax savings with each plan option
Estimate your annual FICA savings based on employee participation
Choose the plan that fits your business size and benefit goals
Try the Savings Calculator Now
📣Disclaimer: Calculations provided are for informational purposes only and do not guarantee specific savings. Actual savings will vary based on individual circumstances.
Book Your Consultation
Explore how Section 125 plans could save your business over $1,000 per W-2 employee each year. Book a free consultation to see how much you could be losing by not having one.
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