Combining Traditional Insurance with a Zero Net Cost Plan: What You Gain

Health insurance continues to get more expensive for families and employers in 2025. Premiums for employer sponsored family plans reached about $24,000 this year, rising faster than wages and everyday expenses (Source: KFF). Employees are paying close to $7,000 of that amount, which means a large share of their paycheck goes to coverage before they even see a doctor. At the same time, people face higher costs for outpatient visits, labs, and mental health care, which pushes many to postpone treatment until the problem grows.

Small and midsize employers feel these pressures the most. Even when a company wants to offer strong benefits, rate increases and rising out of pocket costs can make traditional insurance feel incomplete. Many employers want a plan that protects their teams financially, not just one that meets minimum requirements. This is where combining traditional insurance with a zero net cost plan creates a meaningful shift in what employees experience and what employers can afford.

Why traditional insurance needs support

A traditional medical plan covers major needs. It helps with hospital stays, surgeries, specialist care, and chronic conditions. It is still the foundation of any benefits package. The challenge is the gap between insurance and real life. Deductibles remain high, copayments add up, and many workers struggle to pay for care during the months when costs hit hardest. A national survey shows that 37% of Americans skip or delay medical care because of cost concerns, and this affects everything from physical health to workplace performance (Source: Kaiser Family Foundation).

When employees need routine imaging, urgent care, or mental health sessions, they often face expenses that feel unpredictable. A quick visit can turn into a bill they did not expect. This creates stress and leads to delayed care, which eventually results in higher claims within the traditional insurance plan. Employers end up paying more at renewal, employees continue to feel financially exposed, and the cycle repeats.

How zero net cost plans fill the missing space

A zero net cost plan uses tax strategy and supplemental benefits to create coverage that feels more complete without adding new financial strain. It works by shifting eligible costs into pretax categories through a Section 125 structure and pairing that system with benefits that remove or reduce out of pocket spending. Because pretax contributions lower taxable income, both the employer and the employee save on payroll taxes throughout the year (Source: ADP).

Those savings can then be used to fund programs that support everyday needs. A well designed zero net cost plan can offer no cost primary care visits, simple virtual care, help with basic labs, and supplemental coverage that pays cash benefits when someone needs imaging or a specialist. This blend creates a cushion around the traditional plan. Employees see care become more affordable in the moments that matter most, and employers see reduced financial pressure because pretax savings offset the cost of these added programs.

In 2025, employees can set aside thousands of dollars pretax through health related accounts inside a Section 125 plan, which protects more of their income and reduces the stress of out of pocket spending (Source: Paychex). This structure also helps employers rebuild a benefits package that looks stronger on paper and feels easier for their teams to use. When everyday care becomes more accessible, employees are more likely to treat issues early, which can prevent expensive claims later.

What employers gain when both plans work together

When traditional insurance and a zero net cost plan operate side by side, they cover very different parts of the employee experience. Traditional insurance provides protection against high cost medical events. A zero net cost plan makes the small and medium expenses manageable so people do not avoid care. Together, they create a benefits environment that feels similar to what large companies with bigger budgets offer.

Employees gain predictable out of pocket spending, easier access to routine care, and better support for mental health. Employers gain tax savings, stronger plan utilization patterns, and better retention among workers who appreciate practical benefits instead of complicated structures. This combination also reduces the frustration employees feel when they are covered on paper but still cannot afford to use their insurance.

Once a business sees how the zero net cost structure interacts with its existing plan, it often becomes clear that the goal is not to replace traditional insurance. It is to strengthen it. The zero net cost layer improves affordability and usability while the core insurance plan handles major risks. That balance is what creates a benefits package that supports long term health, productivity, and financial stability for the entire workforce.

If you want to explore how a zero net cost plan can strengthen your current insurance, reduce payroll tax pressure, and give your team a more complete benefits experience, 125 Managed Health can walk you through each option. Their team can review your existing coverage, model the tax impact, and help you design a program that feels stronger without increasing your budget.

Start your journey with 125 Managed Health today.

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