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The cafeteria Plans are explained here in brevity and the entire Cafeteria Plan document should be reviewed before deciding to enroll. Ask human resources for help if you need it to understand the real advantages to this benefit.
Premium Only Plan (POP) – This plan is available to employees who pay for medical dental or vision insurance premiums through their own payroll check deductions. Generally, employees would need to pay these amounts with after tax dollars from their take home pay.
With the POP Plan, the employee is automatically enrolled( unless they decline in writing) to pay their premiums pre-tax. This means any money they pay for premiums is not taxed for Federal, State Local or FICA tax and this saves employees money.
Medical Flexible Spending Account (Medical FSA) - This is used by employees to pay for normal medical and health care expenses incurred for themselves and their families. An employee decides on an amount to put aside in an account the employer manages for the employee. Money the employee puts into the account goes in tax free – right off their gross income.
Now, when employees have qualified medical expenses, they first pay for the expense, then submit a claim to the employer for a refund of their tax free money. Employees could put up to $ 3000 per family into an account. This would save the family nearly $ 700 by paying for their expected medical needs through the Medical FSA.