Section 125 POP and ERISA Wrap SPD Documents for California Employers

Offering group health, dental, vision or other insurance to your employees? Federal law requires two written documents you almost never get from the insurance carrier: a Section 125 Premium Only Plan (POP) so employee premium contributions can be taken pre-tax, and an ERISA Wrap Summary Plan Description (SPD) so your group plan is properly disclosed to employees. California Health Agents prepares both, matched to your actual group policies and coordinated with your payroll provider, from one short online intake form. Add HSA, Health FSA or Dependent Care FSA modules in the same request.

Start the document intake form Call (855) 847-7020 Book a 30-minute consult
7.65%Employer FICA savings on every dollar employees pay pre-tax
25-40%Typical employee tax savings on their share of premium (federal, FICA and California income tax)
$110/dayDOL penalty for failing to furnish an SPD within 30 days of a request
2 daysStandard turnaround from completed intake to signed-ready documents

What is a Section 125 Premium Only Plan?

A Premium Only Plan is the simplest type of cafeteria plan under Section 125 of the Internal Revenue Code. It lets employees pay their share of group insurance premiums with pre-tax dollars through payroll deduction. Without a signed POP document in place, those deductions must be taken after tax, and the employer owes payroll tax on the full gross wage.

The plan itself is just a document. There is no account, no carrier, no annual filing with the IRS and no fee to the government. Your payroll provider simply codes the health, dental, vision and other eligible deductions as Section 125 pre-tax once the plan is adopted.

Employees save

  • Federal income tax on their premium contributions
  • Social Security and Medicare tax (7.65%)
  • California income tax (1% to 12.3%, depending on bracket)

An employee paying $300 a month toward family coverage typically keeps an extra $900 to $1,400 per year.

Employers save

  • The 7.65% employer FICA match on every pre-tax dollar
  • California EDD wages for unemployment and SDI are reduced as well
  • A richer benefit at no added premium cost

Ten employees each deferring $250 a month saves the employer roughly $2,300 a year in payroll tax.

What you receive

Every document set is prepared for your legal entity, your plan year and the benefits you actually offer, then delivered as a signed-ready PDF. A printed binder is available on request.

Section 125 Plan DocumentThe governing plan document, updated for current IRS rules including the 2026 contribution and carryover limits.
Corporate ResolutionBoard or member resolution adopting the plan, ready for the authorized signer.
Summary Plan DescriptionPlain-language SPD for employees explaining eligibility, elections and mid-year change rules.
Employee Election FormsPremium election, waiver and status-change forms for onboarding and open enrollment.
Administrative GuideStep-by-step instructions for payroll setup, annual renewal and record-keeping.
Nondiscrimination Test WorksheetThe eligibility, contributions-and-benefits and 25% key-employee tests the IRS expects you to run each year.

Why get these documents from your broker instead of a document mill

Online document services generate a template from whatever you type into their form. Nobody there has seen your Anthem Blue Cross, Blue Shield of California, Kaiser Permanente, UnitedHealthcare, Aetna, Cigna or Health Net contract, talked to your payroll provider, or will be there at renewal. As your California group benefits broker, we tie the documents to the plan you actually have and keep them in step with it every year.

Matched to your real group policiesWe pull the eligibility, waiting period, plan year and contribution rules straight from your carrier contracts, so the POP and Wrap SPD never contradict the insurance they describe. A mismatch is the most common reason a plan fails an IRS or DOL review.
Payroll set up correctly, the first timeWe coordinate the Section 125 pre-tax coding with Gusto, Rippling, ADP, Paylocity or your bookkeeper, confirm the first pre-tax payroll runs after the plan is signed, and give you the election forms your payroll team needs on file.
Updated every renewal, not every ten yearsChange carriers, add dental, move your renewal date, or bring on a second entity and we amend the documents as part of renewal service. You are never left with an SPD that lists a carrier you dropped two years ago.
Nondiscrimination and owner rules checked up frontWe flag the things a form cannot: S corporation owners who cannot participate, key-employee concentration problems, and eligibility that would fail the 25% test before the plan year starts.
One call for benefits and complianceCarrier question, COBRA notice, new-hire enrollment, a DOL letter, an employee asking for the SPD: the same licensed broker who placed your coverage handles it. No ticket queue, no per-question fee.
Included with your group planIf California Health Agents is broker of record on your group medical plan, the Section 125 POP, Wrap SPD, amendments and annual testing are all included in your service. Not our client yet? Get a group quote and we will bundle the documents into the move.
Request your documents Get a group health quote too

What is an ERISA Wrap SPD, and why the carrier booklet is not enough

ERISA requires every employer-sponsored group health plan, regardless of size, to have a written plan document and to give participants a Summary Plan Description. Insurance carriers issue a certificate of coverage that describes the benefits, but it does not contain the ERISA-required items: the plan sponsor and plan number, the plan year, eligibility and the agent for service of legal process, claims and appeal procedures, COBRA and Cal-COBRA notices, HIPAA notices, and the employer’s right to amend or terminate the plan.

A Wrap SPD “wraps around” the carrier certificates for all of your welfare benefits (medical, dental, vision, life, disability) and adds the missing language. Most California employers combine every insured benefit into one wrap plan, which also means a single Form 5500 filing if you ever cross 100 participants.

Do you need a Wrap SPD? If you can answer yes to any of these, the answer is yes.
  • You offer group medical, dental, vision, life or disability insurance to employees, even one employee.
  • You have never handed employees a document that names your company as plan sponsor and lists an ERISA plan number.
  • Your last SPD is more than five years old and benefits or carriers have changed since.
  • You use a Section 125 POP for pre-tax premiums (the POP is a welfare benefit plan too).

Optional add-ons: HSA, FSA, nondiscrimination testing and Form 5500 filing

The Premium Only Plan covers insurance premiums. Add pre-tax account modules to the same Section 125 plan, or hand us the two compliance chores that are easiest to forget: annual nondiscrimination testing and the Form 5500 filing. Check the box on the intake form and we will ask the two or three extra questions each one needs.

HSA pre-tax contribution moduleLets employees on a qualified high-deductible health plan fund their Health Savings Account through payroll, saving FICA on every dollar. 2026 IRS limits: $4,400 self-only, $8,750 family, plus $1,000 catch-up at 55. Works with any HSA bank or custodian. Note: California does not conform to federal HSA rules, so contributions are pre-tax for federal and FICA purposes but not for California income tax.+$50 · included for clients
Health FSAEmployees elect an annual amount for medical, dental and vision expenses, available in full on day one. 2026 employee election limit $3,400, with a carryover of up to $680 or a 2.5-month grace period. Requires a claims administrator; we can recommend a California TPA.+$150 · $75 for clients
Dependent Care FSA (DCAP)Pre-tax daycare, preschool, before and after-school care and summer day camp for children under 13 or a dependent adult. 2026 limit $7,500 per household ($3,750 if married filing separately). Paired with the Health FSA it becomes a full cafeteria plan.+$150 · $75 for clients
Annual nondiscrimination testingThe IRS expects every Section 125 plan to pass three tests each year. We run them on your payroll census, tell you before year end if key employees or owners are over the 25% concentration limit, and give you a dated results report to keep with the plan document.$199 / year · included for clients
Form 5500 preparation and filingWelfare plans with 100 or more participants on the first day of the plan year must file Form 5500 within seven months of year end. Late filings run $2,739 per day from the DOL. We prepare the return, you sign in EFAST2, we file and archive the acknowledgment.$395 / year · included at 100+ participants

Not sure which to add? Most groups start with the POP and the HSA module when they offer an HDHP, and add the Health FSA once headcount passes ten. We will tell you which combination makes sense for your census.

How it works

  1. Complete the intake form below. About ten minutes. You will need your EIN, plan effective date, eligibility rules and a list of the benefits and carriers. A PDF copy of your answers is emailed to you immediately.
  2. We review and draft. A licensed California group benefits specialist checks your answers against your group policies, flags anything that would fail a nondiscrimination test, and prepares the documents. Standard turnaround is two business days.
  3. Sign, adopt and distribute. The authorized officer signs the resolution and plan document, payroll is coded pre-tax from the effective date, and the SPD goes to eligible employees. We keep a copy on file and remind you when it is time to update.

Pricing

One-time document fees with no annual subscription; documents are updated only when your plan or the law changes. Group health clients receive the core documents as part of broker service.

Document or serviceIncludesOne-time feeGroup health clients
Section 125 Premium Only PlanPlan document, corporate resolution, SPD, election forms, admin guide, test worksheet$249Included
ERISA Wrap SPDWrap plan document and SPD covering all insured welfare benefits, required notices$249Included
POP + Wrap SPD bundleBoth packages above, coordinated plan year and plan number$399Included
Amendment or restatementUpdate an existing POP or wrap plan for a new plan year, carrier or entity change$149Included
HSA pre-tax moduleAdds employee HSA contributions to the POP+$50Included
Health FSA or Dependent Care FSAFull cafeteria plan add-on, each (TPA claims administration billed separately)+$150$75 each
Annual nondiscrimination testingEligibility, contributions-and-benefits and 25% key-employee tests run on your census, with a signed results report for your file$199 / yearIncluded
Form 5500 preparation and filingRequired for welfare plans with 100 or more participants. We prepare the return and schedules, you sign electronically, we file through EFAST2 and keep the confirmation$395 / yearIncluded at 100+ participants
Rush deliverySigned-ready documents within one business day+$75Included

Already our group health client?

Everything marked “Included” is part of the service you already receive when California Health Agents is broker of record on your group medical plan. Complete the intake form and we take it from there.

Have a group plan with another broker?

Sign an agent-of-record letter naming California Health Agents on your current policy and the same client pricing applies. Your carrier, plan and rates do not change; only the broker servicing the account does.

Start the AOR letter

Not a client and not ready to move? Pay the one-time fee now, and if you place your group plan with us within 12 months we credit every document fee you paid. Client pricing is offered on the same terms to every group we serve.

California Health Agents vs. an online document mill

California Health AgentsOnline document services
Who prepares itLicensed California group benefits broker who can see your actual policiesTemplate generated from your form answers
Eligibility matched to your carriersYes, checked against your Anthem, Blue Shield, Kaiser, UHC, Aetna, Cigna or Health Net contractYou are responsible for matching
Payroll setup helpWe coordinate pre-tax coding with Gusto, Rippling, ADP or PaylocityNot included
Annual feeNone. Core documents included for group health clientsNone to $200 per year depending on vendor
Renewal reminders and updatesIncluded with your group plan serviceExtra charge

Section 125 POP and Wrap SPD intake form

Complete the sections below. Fields marked with an asterisk are required. When you submit, a PDF of your answers is generated and emailed to you, and a copy goes to our group benefits team. Nothing is billed until we confirm the order with you, and nothing is billed at all for the items included in group health client service.

Keeping the plan compliant

  • Sign before the first pre-tax payroll. The IRS does not allow a cafeteria plan to be adopted retroactively. If deductions have already been taken pre-tax without a document, adopt the plan now with a current effective date.
  • Run nondiscrimination tests every year. A POP that passes the eligibility test is deemed to pass the contributions-and-benefits test, but key employees still may not receive more than 25% of total pre-tax benefits. We can run and document the tests for you each year.
  • Owners usually cannot participate. Sole proprietors, partners, LLC members taxed as partners and more-than-2% S corporation shareholders (and their spouses) are excluded by law. C corporation owner-employees can participate.
  • Distribute the SPD. To existing employees within 120 days of the plan’s effective date and to new participants within 90 days of becoming covered. Email delivery is fine if employees have work email access.
  • Update when things change. New carrier, new entity, new plan year or a change in eligibility all require an amendment. An SPD must be re-issued at least every five years if amended, every ten years if not.
  • Form 5500. Not required for insured welfare plans with fewer than 100 participants at the start of the plan year. Larger plans must file annually, and the wrap plan lets you file once for all benefits. Filing is available as an add-on.

Frequently asked questions

Do I really need a Section 125 document if my payroll company already takes health deductions pre-tax?

Yes. Payroll software can code a deduction as pre-tax, but the IRS only recognizes the tax treatment if a written cafeteria plan was adopted before the deduction was taken. In an audit, missing the document means the deductions are reclassified as taxable wages for both the employer and the employees.

Are these documents legally binding once they are prepared?

They become legally effective when the employer adopts them, not when they are written. The authorized officer signs the corporate resolution and the plan document on or before the effective date, and the plan is then a valid written cafeteria plan under IRC Section 125 and a valid ERISA plan document. No agency approves or stamps it. The IRS and DOL judge it later, in an audit or an employee claim, on two things: whether the document contains the required provisions and whether the employer actually operated the plan the way the document says. Our documents are built on attorney-drafted master templates that are updated for each year’s IRS and DOL changes, and we complete them from the information you give us on the intake form. California Health Agents is a licensed insurance agency, not a law firm; if you want the documents reviewed for your specific situation, we will coordinate with your CPA or benefits counsel.

Does the plan have to be filed with the IRS or the California Department of Insurance or DMHC?

No. The Section 125 plan document is kept on file by the employer. It is not filed with any agency. The only related filing is Form 5500, which applies to welfare plans with 100 or more participants.

What is the difference between the Section 125 SPD and the ERISA Wrap SPD?

The Section 125 SPD explains the pre-tax premium arrangement. The ERISA Wrap SPD covers the underlying insurance benefits themselves and contains the disclosures ERISA requires for a group health plan. Most employers need both, which is why we offer them as a bundle with a matching plan year and plan number.

Can I start the plan mid-year?

Yes. Choose a short first plan year on the intake form. The plan starts on your effective date and ends on your normal plan year end, usually your group health renewal date, so future years line up with the policy.

How many employees do I need?

One. A Section 125 POP and a Wrap SPD are required for any employer with at least one W-2 employee enrolled in a group insurance plan. Owner-only businesses do not need either, because owners cannot participate.

Which benefits can be paid pre-tax through a POP?

Employee contributions toward group medical, dental, vision, group term life up to $50,000, disability, accident, cancer, critical illness and hospital indemnity coverage, plus HSA contributions when the HSA module is added. Individual policies and voluntary life above $50,000 are generally not eligible.

How long does it take?

Standard delivery is two business days after we receive a complete intake. Rush processing is available if you need documents before an upcoming payroll.

Why not just buy the documents from an online service?

You can, and the template will probably be fine on the day it is printed. The problems show up later: eligibility that does not match the carrier contract, a plan year that drifts from your renewal, a carrier that changed and never got amended, or payroll that started pre-tax deductions before the plan was signed. Because we place and service the group plan itself, we catch those at the source and keep the documents current as part of renewal.

Will you also handle my group health insurance?

Yes. California Health Agents is an independent broker for Anthem Blue Cross, Blue Shield of California, Kaiser Permanente, UnitedHealthcare, Aetna, Cigna and Health Net. If we are broker of record on your group plan, the POP, Wrap SPD, amendments and annual testing are included. Request a group quote or book a consultation.

Need the documents, or the whole group plan?

Our licensed California brokers prepare Section 125 and ERISA documents and compare group plans from 10+ carriers at no cost to you.

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This page is general information for California employers and is not legal or tax advice. Section 125 and ERISA rules change; confirm plan design with your CPA or benefits counsel. Document fees shown are one-time fees and are subject to confirmation before any work is billed. Client pricing applies when California Health Agents is broker of record on the group medical plan and is offered on the same terms to all similarly situated groups.