🏢 What Employers Need to Know About Group Health Plans and Upcoming ACA Changes
- Gabriel & Jessica Foss
- Jun 17
- 4 min read
If you offer—or are considering offering—a group health plan for your employees, the healthcare landscape in 2025 is worth paying close attention to. Changes to how Affordable Care Act (ACA) rules are being applied are already having ripple effects in the small group market, and more shifts could be on the way.
Let’s unpack what’s happening and what business owners should be aware of.
🔍 The Role of the ACA in Group Health Plans
While much of the ACA’s public attention centers around individual plans on the Health Insurance Marketplace, the law also significantly impacts group health plans:
Employers with 50 or more full-time equivalent employees must offer affordable, minimum-value coverage or face penalties.
Small group plans (under 50 employees) aren’t required to offer coverage but may choose to do so for recruiting, retention, or tax reasons.
All group plans must adhere to ACA provisions like essential health benefits, preventive care, and annual limits.
But now, even small groups and level-funded plans are starting to feel the pressure of tighter ACA enforcement and policy changes.
⚠️ Key ACA-Related Changes Affecting Group Plans
1. Enhanced Enforcement of Employer Mandate
The IRS has increased its efforts to collect employer shared responsibility penalties (also known as "pay or play" penalties). Employers offering non-ACA-compliant coverage (such as MEC-only or limited benefit plans) are at greater risk of penalties if even one employee qualifies for subsidies on the Marketplace.
2. Subsidy Rollbacks May Push Employees to Employers
If enhanced ACA subsidies expire, some employees who previously declined group coverage and opted for individual plans may no longer find those plans affordable. This could push more employees back into group plans, increasing costs for employers.
3. Scrutiny of Level-Funded and Alternative Plans
Level-funded plans have surged in popularity due to their cost savings and refund potential. But regulators are taking a closer look:
Some states are introducing new rules to define minimum essential coverage more strictly.
The federal government may begin categorizing some level-funded plans as non-compliant with ACA protections, depending on how benefits are structured.
4. Employee Affordability Testing Is Tightening
The IRS affordability threshold for employer-sponsored coverage in 2025 is expected to remain low (under 9.2%) of household income. If your plan doesn’t meet that standard for all employees, you could face penalties—even if you thought your coverage was “good enough.”
💡 What Employers Can Do Now
If you currently offer a group plan—or are exploring coverage—now is the time to be proactive:
✅ Audit Your Current Plan
Does it meet minimum value and affordability standards?
Are you relying on low-cost limited coverage that may not meet ACA definitions?
✅ Explore Level-Funded Options Carefully
These plans still offer major advantages: fixed monthly costs, traditional-style benefits, and potential refunds if claims are low. But make sure:
The plan is ACA-compliant or at least paired with supplemental MEC if required.
You understand your state’s regulations—some are stricter than others.
✅ Prepare for Shifting Employee Expectations
If Marketplace subsidies decline, employees may rely more on employer-sponsored plans. Being ready with a stable, well-structured plan can give you a competitive advantage in recruitment and retention.
✅ Keep Documentation in Order
If the IRS questions your coverage, timely and accurate documentation is your best protection. Ensure your 1095-C forms, affordability calculations, and plan descriptions are up to date.
🤝 How Business Sharing Plans with Group Coverage Benefits Can Help Employers Under 50 Employees
Business sharing plans with group coverage benefits can be a smart, flexible solution for small employers with under 50 full-time equivalent employees, especially those who are not subject to the ACA employer mandate but still want to offer meaningful health benefits. Here’s how they help:
✅ 1. No ACA Mandate? Still Offer Great Coverage
Employers with fewer than 50 employees aren’t required by law to offer health insurance. But offering a benefit—even if it's not traditional insurance—can:
Attract better talent
Improve retention
Show you care, without overwhelming your budget
Business sharing plans allow you to do this affordably.
💸 2. Lower Costs Than Traditional Insurance
Traditional group health insurance plans can be cost-prohibitive for small businesses:
Premiums can exceed $500–$800 per employee/month
High deductibles and limited networks frustrate employees
Sharing plans typically cost 30–60% less than traditional group health plans—with no hidden fees, and often no deductibles.
⚙️ 3. Group-Like Benefits Without the Complexity
Many top-tier business sharing plans now offer:
Copays for doctor visits and urgent care
Preventative care
Emergency room coverage
Prescription discounts
National PPO access (see any provider)
This means employees can still get real, structured care—but without the insurance red tape.
🌐 4. No Income or Participation Requirements
Unlike small group insurance, which often requires:
Minimum employee participation rates
Employer contribution levels
Narrow plan options
Business sharing plans can be offered with no participation minimums, giving owners flexibility to:
Cover only full-timers or key staff
Let employees opt-in if they choose
Avoid underwriting and minimum contribution limits
🧾 5. May Be Tax-Advantaged (Ask Your CPA)
While business sharing plans are not traditional insurance (and not HSA-eligible by default), some business owners have successfully:
Reimbursed contributions through Section 105 or 125 plans (with guidance from a tax advisor)
Used QSEHRAs to give tax-free reimbursement for sharing plan membership
This means the business may still get some tax benefit depending on structure.
🤝 6. Builds Trust & Loyalty
At the end of the day, offering any kind of healthcare benefit—especially one with transparent pricing and real support—sends a strong message:
“We care about your well-being—and we’re doing something better than the status quo.”
That kind of leadership builds trust and loyalty within small teams.
👇 Final Thoughts
The group health market is evolving fast—and even small employers can’t afford to ignore it. Whether it’s tighter IRS rules, changing subsidies, or plan reclassification, staying informed could protect your business from unexpected costs or compliance headaches.
The good news? There are still flexible, affordable options available—especially if you plan ahead and work with trusted advisors.
Stay ahead of the curve—because in healthcare, what you don’t know can cost you.
Gabriel Foss
Foss Financial Group
📞 260-715-5000