Health care costs are rising again in 2025—and business owners are feeling the impact.
According to Mercer, the average cost of employer-sponsored health plans is projected to rise by 6.5% this year. While that’s a slight improvement over earlier years, it’s still a significant burden for many businesses, especially small and midsize employers.
To manage these expenses, companies are getting smarter—and more strategic—about how they offer health benefits. In this post, we’ll break down the most important trends in employer health care for 2025, including how group level-funded plans are changing the game.
The Shift Toward High-Deductible Plans, FSAs, and HSAs
One of the biggest trends in recent years is the shift to High Deductible Health Plans (HDHPs). These plans have lower monthly premiums but higher out-of-pocket costs when employees need care. HDHPs have become a popular option for employers trying to offer coverage while managing rising costs.
To help employees manage those expenses, many companies are pairing HDHPs with Health Savings Accounts (HSAs) or Flexible Spending Accounts (FSAs). These tax-advantaged accounts let employees set aside pre-tax dollars to pay for qualifying medical expenses—while employers can contribute as well, often as part of a benefits package.
Why Group Level-Funded Plans Are Gaining Momentum
In 2025, group level-funded plans are one of the most talked-about alternatives to traditional health insurance—and for good reason. These plans offer the best of both worlds: predictable monthly costs and the potential to save money if your employees have fewer claims than expected.
Here’s how they work:
You pay a fixed monthly amount that includes the cost of claims, stop-loss insurance, and administration.
If your employees’ actual health care usage is lower than expected, your business may receive a refund or credit at the end of the year.
You get more insight into how your plan is being used, with monthly claims reports and data transparency.
You can design a plan that fits your team’s unique needs—often with more flexibility than ACA-compliant fully insured plans.
For small and midsize businesses, level-funded plans offer a chance to regain control of health care spending without sacrificing the quality of coverage.
Sharing Costs and Unlocking Tax Benefits
Health insurance doesn’t have to be a burden your business carries alone. In most cases, employers cover at least 50% of each employee’s monthly premium, and employees pay the rest—often with the option to cover dependents.
Better still, there are powerful tax incentives for offering health benefits:
Employer contributions are tax-deductible.
Employees can use pre-tax payroll deductions to pay their share of premiums.
Contributions to HSAs and FSAs lower taxable income for both parties.
That’s a win-win. You get to reduce your taxable income, and your team gets access to affordable, tax-advantaged health care coverage.
Why It Matters
Offering health insurance is more than a financial decision—it’s a talent strategy.
In today’s competitive job market, candidates are looking for employers who invest in their well-being. A strong health benefits package can help you:
Attract and retain top-tier talent
Increase employee satisfaction and productivity
Reduce turnover and absenteeism
In other words, offering smart, cost-effective health coverage isn’t just good for your bottom line—it’s good for your people.
Final Thoughts
As 2025 unfolds, employers are under pressure to do more with less. But by embracing modern options like level-funded plans, HDHPs, HSAs, and FSAs, you can create a health care strategy that controls costs without compromising on value.
If you’re ready to explore health care options that work for your business and your team, now’s the time to act.
(All information provided is for educational purposes only. Consult a healthcare professional for personalized health advice.)
