The three plan types, plainly
All three sit under the same umbrella, a Section 125 cafeteria plan, but each one covers something different. Confusing them is common, and it matters for testing because each one carries its own set of required nondiscrimination tests.
Premium Only Plan (POP). The simplest version. It lets employees pay their share of health insurance premiums with pre-tax dollars instead of after-tax dollars. Nothing else. If pre-tax premiums are the only benefit your payroll deducts, this is what you have.
Health FSA. A flexible spending account layered on top of premiums. Employees elect a dollar amount at the start of the plan year and can use it, pre-tax, on qualifying medical, dental, and vision expenses not covered by insurance.
Dependent Care FSA (DCAP). A separate flexible spending account for dependent care expenses, daycare, before/after-school care, or care for a dependent adult, so a parent or caregiver can work. It has nothing to do with medical expenses and is governed by a different part of the tax code than the Health FSA.
Common misconception: a Dependent Care FSA does not require a Health FSA. They are independent benefits. A company can offer premiums plus dependent care only, with no Health FSA at all.
How to tell which one you have
Check your open enrollment materials or Summary Plan Description for the benefits actually offered. Payroll deduction codes are the most reliable source if you have access to them, a Health FSA and a Dependent Care FSA will show as separate deduction line items from the premium deduction, since employees elect and fund them separately.
If you're not sure, your broker or whoever administers your benefits can confirm it in a few minutes. Guessing wrong before testing usually just means re-doing the intake, so it's worth confirming up front.
Why the difference matters for testing
Each benefit type adds its own required tests on top of the three core Section 125 tests every plan runs (Eligibility, Contributions & Benefits, and Key Employee Concentration):
- Premium Only Plan: the three core tests only.
- + Health FSA: adds two tests specific to §105(h), an Eligibility test and a Benefits test for the FSA.
- + Dependent Care FSA: adds four tests specific to §129, covering eligibility, contributions and benefits, owner concentration, and an average-benefits comparison between highly compensated and other employees.
A plan offering all three benefit types runs all nine tests. A Premium Only Plan runs three. Knowing which category you fall into before testing starts is what determines the actual scope of the engagement, which is also why it's the first question on our intake sheet.
Side-by-side comparison
| Plan Type | What it covers | Tests required |
|---|---|---|
| POP | Pre-tax health insurance premiums only | 3 core §125 tests |
| POP + Health FSA | Premiums plus a medical/dental/vision spending account | 3 core + 2 §105(h) tests = 5 |
| POP + FSA + DCAP | Premiums, a Health FSA, and a Dependent Care FSA | 3 core + 2 §105(h) + 4 §129 tests = 9 |
For exactly what each of the nine tests checks and why, see our full breakdown of what Section 125 nondiscrimination testing is. For what each combination actually costs to test, see our testing cost breakdown.
FAQ
Can a company offer a Dependent Care FSA without a Health FSA?
Yes. Dependent care and health flexible spending accounts are governed by different sections of the tax code and are entirely independent of each other. A company can offer premiums plus a Dependent Care FSA with no Health FSA at all, or any other combination. Don't assume one implies the other.
Do most employers offer all three benefit types?
No. Premium Only Plans alone are the most common setup, especially among smaller employers. Adding a Health FSA is the next most common step up. Offering all three, premiums, a Health FSA, and a Dependent Care FSA, is typically limited to larger employers with more developed benefits programs.
Which plan type is the most expensive to test?
Cost generally scales with how many tests apply. A Premium Only Plan requires the fewest tests and costs the least to test. Adding a Health FSA or Dependent Care FSA adds required tests specific to that benefit, which is reflected in testing pricing. See our cost breakdown for exact figures.
How do I find out which plan type my company actually has?
Check your open enrollment materials or Summary Plan Description for a list of pre-tax benefits offered. Payroll deduction codes are another reliable source, a Health FSA and Dependent Care FSA deduction will appear as separate line items from a premium deduction. Your broker or HR platform can also confirm it directly.