Short answer: A POP is a simple Section 125 cafeteria plan that lets employees pay their share of group-insurance premiums with pre-tax dollars, cutting income and payroll taxes for employees and payroll taxes for the employer.
A Premium Only Plan (POP) is the most basic type of Section 125 cafeteria plan. It allows employees to have their portion of the group-insurance premium deducted before taxes, which lowers their taxable income (and FICA) and reduces the employer’s payroll-tax burden. A POP requires a written plan document and is subject to nondiscrimination testing so it doesn’t disproportionately favor highly compensated or key employees. It’s a low-cost way to make existing premium contributions more tax-efficient.