Daniel Stewart

POP vs HSA, Deciding Which One is Best for You

When it comes time to enroll in employee benefits, you'll have many options. In addition to health insurance, life insurance, and other great perks, you might see the option to get an HSA or participate in a POP.

So, what are these employee benefits, and how do they work?

All About POP

POP is an acronym for "premium only plan." Premium only plans are a unique way to save money and increase take-home pay. Both employees and employers benefit from having a POP. If you would like to know about premium only plans, visit this website.

The concept is pretty simple. A POP is a type of benefits plan that's IRS-regulated and employer-sponsored. When you participate in a POP, you redirect a small portion of your compensation towards tax-free benefits.

Your portion of insurance premiums comes directly from your salary before its subject to income tax. Premium only plans can cover group term life insurance, health insurance, and other premiums you need to cover.

But because you're using the POP to direct your pre-tax compensation, you get more take-home pay. Plus, you pay fewer taxes. Who doesn't want that?

What's an HSA?

An HSA is another tax-advantaged account. HSA stands for "health savings account." An HSA serves to cover unexpected medical expenses. You can contribute a certain amount to it every year and use the funds to pay for qualified medical expenses tax-free.

The great thing about an HSA is that it can also grow with investments. There are penalties if you use the funds for anything other than medical expenses, but it's a great way to save and cover unexpected medical issues.

Funding an HSA with a POP

Not everyone realizes this, but you get an HSA and participate in a POP simultaneously! HSA contributions qualify under a POP. That means you can contribute up to the annual limit directly from your pre-tax salary.

Joining a POP can make managing your benefits much more straightforward. Instead of worrying about premiums and contributions separately, you can use a POP and direct part of your pre-tax salary and enjoy the perks without the stress.

Author Resource:-

Daniel Stewart has been helping people with their money management and personal finance with over 15 years' experience in business finance. You can find his thoughts at savings investments blog.