Premium deductions through a Section 125 Premium Only Plan (POP)

[Guest pedmund]

Are employees enrolled in a premium only plan under Section 125 required to sign an Election to Participate form each plan renewal year before their deductions can be taken on a pre-tax basis?

Can you require that all health premiums deductions be pre-tax under a premium only plan or do you need to give the employee a choice?

[Guest b2kates]

As always, the plan language controls.

Yes you can have an evergreen election; i.e. always defaulted to continue election after initial election.

Can you require that all health premiums deductions be pre-tax under a premium only plan or do you need to give the employee a choice? This is an unclear area of the law. PRop Treas. Reg 1.125-1 Q&A8 requires an election in writing.

The IRS has separately authorized negative elections in the 401K plan context.