Advanced Large Group Health Insurance Strategies (50 Employees and Up)
How Large Employers Can Save Up to 50% Per Employee on Group Health, With No ACA Shared Responsibility Penalty
By Wiley Long III, President – HSA for America
Reviewed by Lou Spatafore
Fact checked by Misty Berryman – Updated 4/21/2025
Request a Group Quote for Your Company
Cut Large Group Health Insurance Costs in Half
The average annual cost of employee group health insurance has reached a staggering $25,572.
According to the 2024 KFF Employer Health Benefits Survey.
This program can enable you to cut those costs in half – while avoiding costly shared responsibility penalties under the Affordable Care Act. An employer with 200 employees may save over $1 million per year.
Specifically, employers using this strategy allow their employees to choose either one of two options:
Option One
A non-insurance cost sharing program.
Option Two
Health insurance, through a level-funded plan or an ICHRA reibursement.
Option 1: Cost Sharing
Most of your employees will probably want to go with the cost sharing option.
Catastrophic Protection
Wellness & Preventative Care
Visit Any Doctor of Choosing
Cost sharing is setup via a coop or a health sharing arrangement. Both are affordable non-insurance solutions that provides excellent protection against large and even catastrophic health care needs –– at a fraction of the cost of a full-fledged, traditional group health insurance policy.
Also, this plan allows the member to go to any doctor they choose – with no restrictive networks. This empowers your workers with much more freedom and flexibility, and potentially a vastly superior healthcare experience in the event they need care.
This plan also provides basic wellness services and preventative care. It also enables employers to sidestep the shared responsibility penalties.
“We were hesitant at first to move our company’s health care plan away from the larger corporations, but have found the transition to be rewarding for our employees and less expensive for us as a company. In fact, our savings were so significant that our firm offered to cover our employee’s first major incident as an added benefit to our staff.”
Preston Jenson, Managing Partner, Panda Accounting
“We are very impressed with the level of coverage that they provide and appreciate their consistent efforts and success in making these plans better each year. Our employees are covered for all preventive and emergency needs, and they have access to a wide network of doctors and hospitals.”
Christine Gott, Director of HR, GVA Property Management
Option 2: Health Insurance
This is structured through a streamlined level-funded plan, or through a health reimbursement arrangement that allows the employee to get a plan on the federal or state marketplace.
How Does the Health Insurance Work
For those employees who choose to go with a health insurance option, we will set up a level funded group health plan, or use financial tool called an ICHRA to fund individual health insurance.
A level-funded health plan is a group insurance option that blends characteristics of fully insured plans with self-insured plans, commonly used by applicable large employers (ALEs).
With a level-funded plan, the employer pays a fixed monthly payment to cover estimated claims, administrative costs, and stop-loss insurance.
If claims are lower than anticipated, the employer may receive a refund at the end of the year. If claims are higher, stop-loss insurance steps in to cover the overage, limiting your risk.
If we set up an ICHRA, employees will sign up for their plan on the health insurance marketplace.
So which option is best?
The answer to this question is different for each covered individual and household.
But here is the general rule:
- Most employees without serious pre-existing conditions will choose the cost sharing option because of its much lower costs.
- Those with pre-existing conditions will usually choose the insurance plan, which does not have any waiting periods on pre-existing conditions.
Not an ALE? Click Here for “Health Care Strategies for Smaller Employers”
Request a Group Quote for Your Company
Complete Guide to Small Business Healthcare Plans
Free PDF Download
Explore this step-by-step report backed by the knowledge and experience of our in-house small group insurance experts.
Shared Responsibility Penalties
The Part A Penalty
If you don’t offer at least minimum essential coverage to 95% of your full-time employees, you’ll face the ACA’s “A” penalty—up to $2,970 per employee per year (in 2024).
The Part B Penalty
If the coverage you offer doesn’t meet the ACA’s minimum value rules, or isn’t affordable, you’ll face the ACA’s “B” penalty—up to $4,460 per employee who receives a subsidy through the ACA Exchanges.
However, with this strategy, by offering all your qualified workers a choice between a qualified level-funded plan and a MEC + health sharing combination, your company will not be subject to Part A or Part B shared responsibility penalties at all.
As an applicable large employer, you have options that can save a substantial amount of money, while still giving your employees the access to affordable, quality healthcare they need and deserve.
Learn More: How Much Can Health Sharing Save Compared to Traditional Health Insurance?
“Our experience has been exceptional… The benefits are affordable, comprehensive, and offer excellent coverage. The team is responsive and a pleasure to work with.”
Heather Gray, Chief Operating Officer, Hendersonville-Mill Springs Family Dental
How Cost Sharing Helps Pay for Large and Catastrophic Costs
Cost Health sharing and coop plans are innovative, non-insurance, non-profit programs that allow employees to share medical expenses with a community of like-minded individuals.
Lower Costs
Cost sharing plans typically have much lower monthly contributions than traditional insurance. Monthly costs are typically around half the cost of a traditional legacy group health policy.
Shared medical expenses spreads the risk around thousands of fellow members and lowers the burden on any one individual.
Member Responsibility Amount
Once a member meets their “member responsibility amount” (similar to a deductible), the community shares the remaining eligible medical costs. This helps employees avoid high additional out-of-pocket expenses, such as copays and coinsurance, that traditional plans often impose.
Limitations
Cost sharing plans don’t cover every medical expense, and they often limit coverage for prescription drugs and mental health care.
They also typically impose a waiting period before they will share costs for pre-existing conditions. This is why many people with significant pre-existing conditions that may need ongoing care will choose the health insurance option.
SPECIAL OFFER FOR GROUP SIZES OF 50+
Pre-existing condition waiting periods waived – Our health share plan partners and will share up to $25,000 per member for pre-existing conditions
Why Are Cost Sharing Plans So Inexpensive Compared to Health Insurance?
Unlike traditional health insurance plans subject to ACA requirements, cost sharing members don’t have to bear the cost for other peoples’ pre-existing conditions.
Membership is restricted to people who don’t abuse drugs or alcohol, for example.
And health sharing programs aren’t required to pay for things that most members don’t want or need, such as gender reassignment surgery or costly drug addiction rehab for adults.
The result is a much better risk pool, enabling much lower overall costs for members compared to health insurance products.
However, this is also why health sharing isn’t always a great match for workers who have pre-existing conditions. Some workers will likely have a pre-existing condition likely to need ongoing care or that puts them at a high risk of needing an expensive medical intervention.
That’s why under this concept, you give these employees a choice: A cost sharing option for those in good health, and an ACA-qualified traditional health insurance plan for those with some medical issues they need to plan for.
“Our experience with them has been outstanding. Not only are they affordable, but their flexibility in offering a variety of plans has been instrumental in meeting the diverse needs of our employees across multiple states. Their hands-on approach, especially during the initial stages of our partnership, was invaluable. They provided comprehensive resources and guided us through every step of the enrollment process, ensuring that we were fully supported.”
Lacee Shapley, Human Resources Manager, Enviro Guard Pest Control
Summary: How to Cut Your Company Benefit Costs by $100,000/year
By offering your employees a choice of a cost sharing plan, or a more expensive health insurance plan, you will avoid part A and part B penalties, you will be giving your employees a choice between health insurance or less expensive healthsharing, and you are saving your employees and your company a significant amount of money.
Cost Sharing Plans
- provide basic coverage focused on preventive services
- lower cost option for employers and employees
- do not cover major medical services
- do not by themselves protect employers from the ACA’s “B” penalty
- Most cost sharing plans have a waiting period before they will share costs for pre-existing conditions. However, with our plan, pre-existing conditions are shareable up to $25,000 for groups of 50 or more.
Health Insurance Plans
- Set up as individual plans or a level-funded group plan, depending on which offers the best value
- Cover a wider range of healthcare services, including hospital and doctor visits
- Covers pre-existing conditions without a waiting period
- Premiums are higher compared to cost sharing, but lower than traditional group health plans
Request a Group Quote for Your Company
Why Most Workers Will Actually Prefer Cost Sharing to Traditional Group HMOs and PPOs
We often find that it’s necessary to invest some effort in some employee education when introducing this concept to ALE work forces.
But when employees fully understand how health sharing works and the costs involved, most employees will find that they’re better off choosing a cost sharing solution over their old, overpriced traditional group health plans.
Here’s why:
- No Coinsurance or Copays: Once a member meets their responsibility amount, these plans typically cover 100% of eligible expenses. This means employees won’t have to deal with additional copays or coinsurance. This can be especially appealing to younger, healthier workers who don’t anticipate high medical expenses.
- They can choose their own doctors. While HMOs and PPOs that dominate the group market require workers to choose doctors and hospitals on the plan’s list of approved providers for non-emergency care to fully use their benefits, our cost sharing plans allow members to see any doctor they choose.
- Lower Monthly Costs: Cost sharing plans typically have much lower monthly costs compared to traditional insurance. This makes them attractive to healthy workers who want to minimize their healthcare spending.
Cost Sharing Plans vs. Health Insurance at a Glance
| Features | Cost Sharing Option | Health Insurance Option |
|---|---|---|
| Definition | Basic coverage that satisfies the ACA’s individual mandate for preventive care | Health plan that covers at least 60% of total healthcare costs and includes substantial medical services |
| ACA Compliance | Meets ACA requirements for offering basic preventive services | Meets ACA employer mandate by offering at least 60% of covered benefits (minimum value) |
| Covered Services | Covers all preventive services like vaccinations, screenings, and wellness visits. Health sharing component shares for large/catastrophic costs. | Covers a broader range of services including hospital stays, physician services, surgeries, and more. Employees responsible for 40% of cost, up to plan out-of-pocket caps. |
| Comprehensive Coverage or Sharing | Yes | Yes |
| ACA Shared Responsibility Penalties | Avoids shared responsibility penalties when offered in conjunction with a qualified 60% level-funded plan | Avoids shared responsibility penalties by offering minimum value and affordable coverage |
| Premium Costs | Much lower monthly costs compared to traditional health insurance and level funded plans. | Higher premiums compared to cost sharing, but much lower than traditional comprehensive plan costs |
| Deductibles and Out-of-Pocket Costs | Minimal out-of-pocket costs. | Higher deductibles and out-of-pocket costs similar to Bronze plans, but varies by plan design |
| Typical Use Case | Satisfies ACA individual mandate; minimal coverage for low-cost employers | Full employer-sponsored health plan option to avoid penalties and provide adequate coverage |
How Much Can This Large Group Health Insurance Strategy Save?
In most cases, relatively healthy employees who help share the cost of their own health plans choose Option 1, with a health sharing plan to help with potential catastrophic needs. This option typically saves around 40% to 50% in employee healthcare costs compared to traditional group health plans.
If your employees pay a percentage of their health care costs (cost sharing), they can benefit from the savings, too––a strategy that provides employees a powerful incentive to choose the most cost-effective option.
Some employees who have pre-existing conditions, on the other hand, will likely prefer Option 2, the health insurance plan, which has no restrictions on pre-existing conditions, and provides substantial coverage of hospital and outpatient costs.
This option typically saves around 20% compared to the cost of a traditional group health insurance indemnity plan.
The more employees that choose Option 1, the more you can expect to save on your employee health benefits compared to traditional group health.
But you should experience substantial savings no matter which option your employees select.
Learn More: How Much Money Can Health Sharing Save?
CASE STUDY: Al’s Widgets Saving $700,000 Per Year
Al’s Widgets, Inc. is an applicable large employer ALE with 115 full-time workers.
The company recently dropped its traditional group health plan, which was costing them $1.5 million per year. This was unsustainable in the current environment.
Instead, Al’s Widgets offered employees a choice:
1.) Sign up for the company’s level-funded plan, or
2.) enroll in a cost sharing coop plan plus a minimum essential coverage (MEC) plan that covers preventative care benefits while avoiding ACA penalties.
In practice, most workers will choose the less expensive MEC + health sharing option, while those with significant pre-existing conditions will go for the level-funded plan option.
Both options save Al’s Widgets significant money compared to the traditional health insurance approach.
In this case, if 30% of the workforce elects the level-funded option, Al’s Widgets would save about 42% compared to their previous health health plan costs per year.
With younger and healthier workforces, and those with well-executed wellness programs, about 20% of workers will elect the level-funded option. In that case, Al’s Widgets would save nearly 50% compared to their previous traditional health insurance plan cost, or roughly $700,000 per year.
Employees also saved money compared to what they were paying for their traditional group health plan. Nearly everyone who didn’t have other coverage from a spouse’s employer elected to join the health sharing plan.
Al’s Widgets split the cost with them, and both sides enjoyed significant savings compared to their out-of-pocket costs for traditional health insurance.
Note: Each Plan Saves Money Compared to Offering a Traditional Group Plan
Not offering health benefits at all saves money, of course. But that strategy costs ALEs in penalties, and costs all employers in recruiting, retention, absenteeism, presenteeism, and lost productivity. This is why nearly all large employers choose to offer a qualifying health benefit.
*Employees don’t actually have to enroll in these plans in order for you to avoid paying shared responsibility payments. You just need to offer them.
Are You An Applicable Large Employer (ALE)?
The shared responsibility penalties only apply to applicable large employers (ALEs). Under the Affordable Care Act, an ALE is defined as an employer with 50 or more full-time employees, including full-time equivalents (FTEs), during the previous calendar year.
A full-time employee is one who works at least 30 hours per week or 130 hours per month.
To calculate FTEs, add the total number of hours worked by part-time employees in a month, and divide by 120. Combine the number of full-time employees and FTEs to determine if you meet the ALE threshold.
If you are an ALE, you are subject to the Employer Shared Responsibility Provisions of the ACA. This means you must offer affordable, minimum essential health coverage to at least 95% of your full-time employees (and their dependents) or potentially face shared responsibility penalties if one or more employees receive a premium tax credit for purchasing coverage through the Health Insurance Marketplace.
“After years of frustration and yearly shopping for our employee major medical insurance plan, our group went with a minimum essential coverage health plan paired with Zion HealthShare for our 2023 plan year. We couldn’t be happier. I am personally passionate about this product because I believe it’s the future of health care. Insurance companies are oftentimes wasteful and make billions of dollars annually on the backs of small businesses like ours. [This strategy] cuts away the expensive bureaucracy that has become characteristic of the modern insurance payer.”
S. Phillips Jones, Sr., CEO, Vein Specialists of the South
Large Group Health Insurance Bottom Line
Offering employees a choice between health insurance plan or a healthshare membership can save them money and increase their take-home pay, while drastically reducing your company’s healthcare costs, and still meeting all ACA requirements.
By shifting to a much lower-cost plan design, you can protect both your business and your employees from the financial burden of traditional insurance.
For a free consultation, analysis, and plan design assistance, request a Group Quote below, or contact an HSA for America Personal Benefits Manager today. Let us help you find the best solution for your business and your employees.
Need Assistance?
Get Help in Figuring Out the Best Plan for You
Schedule a free appointment with our Personal Benefit Managers. It’s fast, friendly and easy with no obligation.
Ready Now?
Request a Group Quote for Your Company
Read More About Group Health Insurance Options in Your State
Available Plans | HSA Info | Healthshare Info | FAQS | Blog | News | About Us | Contact Us | Privacy Policy | Agents Needed
Contact Information:
1001-A E. Harmony Rd #519 Fort Collins, CO 80525
800-913-0172
info@HSAforAmerica.com
Disclaimer: All information on this website is relayed to the best of the Company's ability, but does not guarantee accuracy. Information may be out of date. The content provided on this site is intended for informational purposes only and does not guarantee price or coverage. This site is not intended as, and does not constitute, accounting, legal, tax, and/or other professional advice. Determination of the actual price is subject to the Carriers.