According to a Mercer report, the average per-employee cost of group medical insurance coverage will increase by 5.6% on average per year.

Over the next three years, 70% of employers reported expect “moderate to significant” increases in employee heath, according to Willis Tower Watson.

Meanwhile, the unsubsidized cost of Affordable Care Act Marketplace plans is increasing by around 10%, according to the Kaiser Family Foundation.

As renewal season approaches, many employers are pulling out the green eyeshades, looking for ways to reduce health care expenditures – without leaving employees hanging out to dry.

Small businesses are already floundering. And lower-income families are struggling even more.

Employers in higher-wage industries and less labor-intensive sectors have some wiggle room. Their employees can handle some additional cost sharing, if need be.

But employers in lower-wage industries and their employees are caught in a suffocating affordability squeeze: Households under 200 percent of the federal poverty line already spend a whopping 62 percent of their discretionary incomes on healthcare costs, including insurance premiums, deductibles, co-pays, OTC medications, and other out-of-pocket expenses.

If we don’t do something to change course, lower-wage workers may wind up spending 70 to 75% of their discretionary income on medical expenses, according to a McKinsey study. 

Medical expenses aren’t very discretionary.

And as far as employers are concerned, the passage of the Affordable Care Act nearly 13 years ago didn’t make health insurance very affordable for employers at all.

Clearly, reliance on the traditional employer-based group health insurance model isn’t working. It’s just not sustainable for many employers, nor workers, who are seeing their share of premiums, deductibles, and co-pays rise year after year.

As costs continue to rise, many employers have found a better way.

Alternatives to Employer Health Insurance Solution: Walk Away From Group Health

One solution: Ditch the group health plan altogether. Instead, many companies are empowering their employees to make their own decisions. In lieu of a group health insurance plan, they’re giving their employees the cash they need to choose and purchase the insurance coverage of their choice.

Why does that make sense? Because as long as their employer does not offer a group health plan, workers may qualify for big subsidies when they buy their own plans as individuals.

With traditional group health insurance plans, in contrast, employers and their workers must pay the entire cost.

When you migrate employees from group health plans to the individual marketplace, you are also effectively shifting much of the costs from your own books and from your own employees back to the government. 

Another alternative to employer health Insurance many small businesses are turning to is health sharing memberships.

Health sharing is a cost-saving alternative to conventional insurance solutions. but it is not insurance. It’s a voluntary association of people who share the same values who have agreed to share each other’s medical bills. 

Risks that are too great for any one person or family to bear are thus spread among the entire membership.

Because health sharing ministry organizations are not insurance companies, they are free to turn down people with pre-existing conditions, or to impose waiting periods on costs associated with pre-existing conditions and surgeries. 

These waiting periods generally range from 12 to 36 months. Some plans also place dollar amount caps on expense sharing related to pre-existing conditions. 

They can also exclude expenses that insurance companies must accept, such as gender reassignment surgery, drug rehab costs, or injuries received while driving drunk or under the influence of drugs.

But healthsharing members and employers often like these exclusions: Because of these and other restrictions, healthshare plans tend to attract healthy members who live responsible lifestyles.

As a result, healthshare plans typically cost 30% to 50% less per member per month than a traditional group insurance policy, or for an unsubsidized ACA Marketplace policy.

One caveat: unlike with health insurance which is a tax-free benefit to the employee, health sharing memberships provided to your employees would be taxed the same as other employee pay.

But savings are so significant with heathsharing plans compared to group health policies that for workers who are in good health, it makes solid fiscal sense, even without the tax deductions.