No Deductible? No Copay? Here's How Small Biz Does It

What if your employees had a health plan with zero deductibles and zero copays — and could actually make money by using it wisely? It sounds too good to be true. But small businesses are making it happen right now through a smart combination of defined contribution benefits and employer-sponsored indemnity plans.

The Problem With Traditional Group Health Insurance

Most small business owners know the pain of group health insurance. Premiums go up every year. Employees still face high deductibles before coverage kicks in. A $500 or even $1,500 deductible means workers pay out of pocket for most routine care. That's not really coverage — it's a bill with extra steps.

There's a better way.

How the Defined Contribution Model Works

Through The Benefit X-Change, employers set a fixed monthly dollar amount per employee. That's it. The employer controls the budget. No surprise premium hikes. No guessing what next year's plan will cost.

Employees then have choices. Many use that employer contribution through an ICHRA — an Individual Coverage Health Reimbursement Arrangement — to buy their own individual health insurance plan. The employer reimburses them up to the defined contribution amount for a qualifying plan they choose themselves.

But here's where it gets interesting for employees who want something different.

The Indemnity Plan Option: No Deductibles, No Copays

Employees who opt out of the ICHRA can choose an employer-sponsored indemnity plan instead. These plans work completely differently from traditional insurance.

Instead of paying a network to negotiate prices on your behalf, indemnity plans pay a set benefit amount for covered procedures. There's no deductible to meet first. There's no copay at the door.

Here's a real example of how it plays out:

• The indemnity plan pays $800 for a covered procedure.
• The employee shops around and finds a provider who charges $600.
• The employee keeps the $200 difference.

That's real money back in the employee's pocket — just for being a smart healthcare shopper.

Why This Creates Better Healthcare Decisions

Traditional insurance removes any reason to shop around. The insurance company negotiates the price. The employee just shows their card and pays whatever is left over after the "discount." There's no incentive to look for a better deal.

Indemnity plans flip that completely. When employees know they keep the savings, they start asking questions. They call around. They compare prices. And what they find is often surprising — cash-pay prices at many providers run 50% to 80% less than standard insurance rates.

That kind of shopping creates real market competition. It drives costs down over time — for everyone.

The Employer Stays in Control

The employer's defined contribution amount applies to the indemnity option too. If the indemnity plan premium is less than the defined contribution, the employee pays nothing out of pocket. If it costs more, the difference is simply deducted from the employee's paycheck. Simple, predictable, and fair.

No more open enrollment surprises. No more annual premium shock. Just a clear budget that works for the business and real coverage that works for employees.

Ready to Offer Smarter Benefits?

Small businesses don't have to choose between unaffordable group plans and leaving employees uncovered. There's a smarter path. Visit benefitx.com to see how The Benefit X-Change can help you set up a defined contribution health benefit that puts money back in everyone's pocket.