Zero Deductible Group Health Plans: What Employers Should Know

Zero deductible group health plans appeal to employers who want employees to use care without worrying about a big bill first. The idea is simple. The plan pays its share from day one, and the member pays a copay.

The catch is price. Someone pays for that first-dollar coverage, and it is either the employer, the employee or both. This guide shows how these plans work, what they cost and what else can lower employee out-of-pocket costs.

Key facts

• Among workers with single coverage and a general annual deductible, the average deductible was $1,886 in 2025, and 88% of workers with single coverage had one (KFF Employer Health Benefits Survey, 2025).
• 34% of covered workers were in a plan with a deductible of $2,000 or more for single coverage in 2025 (KFF Employer Health Benefits Survey, 2025).
• The 2026 out-of-pocket maximum for a non-grandfathered group plan is $10,600 for one person and $21,200 for a family. The 2027 limits are $12,000 and $24,000 (Milliman, citing federal rules, 2026).
• A high deductible health plan must have a deductible of at least $1,700 for self-only coverage and $3,400 for family coverage in 2026 (IRS Rev. Proc. 2025-19).
• Employers with fewer than 50 full-time and full-time equivalent employees are not required to offer health insurance (HealthCare.gov, 2026).

What is a zero deductible group health plan?

A zero deductible group health plan is an employer health plan that does not make members pay a set dollar amount before coverage starts. Members pay copays for visits and prescriptions, and the plan pays the rest of covered in-network care.

A deductible is the amount a member pays for covered care before the plan begins to share the cost. With a $0 deductible, that step is gone. Many of these plans still charge coinsurance, which is a percentage of the bill, for hospital stays and surgery. Read the summary of benefits and coverage before you assume everything is free.

Our guide to what a $0 deductible health plan means explains the terms for individual shoppers.

Do zero deductible group health plans really exist?

Yes, many carriers sell group plans with a $0 deductible, usually in the form of a copay plan. They are less common than plans with a deductible, and they carry higher premiums.

KFF found that 88% of workers with single coverage had a general annual deductible in 2025 (KFF Employer Health Benefits Survey, 2025). That means about 1 in 8 did not. Availability varies by state and carrier, so ask your broker to quote at least one $0 deductible option next to your current plan.

Two things stay the same on every plan. The plan still has an out-of-pocket maximum, which caps what a member pays in a year. For 2026, that cap is $10,600 for one person and $21,200 for a family on a non-grandfathered group plan (Milliman, 2026).

How much does a $0 deductible group plan cost?

A $0 deductible group plan costs more in monthly premium than a similar plan with a deductible, because the carrier takes on more of the early claims. The size of the gap depends on your state, your employee ages and the copay schedule.

Use the table below as a way to compare quotes. The numbers are a hypothetical example, not a quote.

Table: Hypothetical comparison of two group plans (single coverage, per employee)

In this example, Plan A costs $960 more each year. A member who would pay less than $960 in deductible costs under Plan B is better off on Plan B. A member with a surgery or a long-term condition is better off on Plan A.

The $1,886 figure is the 2025 national average deductible for single coverage (KFF, 2025). Your own plan may be higher or lower.

Who pays for a lower deductible?

The employer, the employee or both pay for a lower deductible through the premium. The share depends on how much of the premium your company covers.

In 2025, workers paid an average of $1,440 for single coverage and $6,850 for family coverage out of average premiums of $9,325 and $26,993 (KFF Employer Health Benefits Survey, 2025). That is 16% of the premium for single coverage and 26% for family coverage. If you pick a $0 deductible plan and keep the same percentage, both sides pay more.

Can you pair a $0 deductible plan with an HSA?

Generally no. A Health Savings Account, or HSA, requires a high deductible health plan. For 2026, an HDHP must have a deductible of at least $1,700 for self-only coverage and $3,400 for family coverage (IRS Rev. Proc. 2025-19).

A $0 deductible plan is below those minimums. Employees on that plan generally cannot make HSA contributions. If your employees value an HSA, a plan with a lower deductible is the wrong tool. See our HSA contribution limits guide for the 2026 and 2027 numbers.

What are lower-cost ways to cut deductible costs for employees?

Employers have three lower-cost ways to cut what employees pay before coverage starts: a plan with a smaller deductible, an HRA that reimburses part of the deductible, or a Section 125 plan that lets employees pay premiums before tax.

1. A middle-deductible plan. A $500 to $1,000 deductible plan often costs less than a $0 plan and is far easier on a paycheck than a $3,000 plan.
2. An HRA. A health reimbursement arrangement, or HRA, is an employer-funded account that repays employees for medical costs. Our guide to the excepted benefit HRA covers one type, and how an ICHRA works covers another.
3. A Section 125 plan. A Section 125 cafeteria plan is a written plan under the IRS code that lets employees pay premiums before income and payroll tax. Read the Section 125 cafeteria plan guide for the rules.

A level-funded plan is another option for some groups. Our level-funded health plan guide explains how it differs from a fully insured plan. For other routes, see group health insurance alternatives.

Who sets up the Section 125 plan behind a richer health plan?

Summit Health Benefits sets up and administers Section 125 cafeteria plans for employers. A Section 125 plan needs a written plan document, and many employers do not have one in place when they change health plans.

Summit Health Benefits provides the written plan document and the summary plan description, supports nondiscrimination testing and has its plan documents reviewed by ERISA attorneys. The administration fee is $35 per enrolled employee per month. The fee is paid from the employer FICA savings the plan creates, so employers typically net about $56 to $101 per enrolled employee per month.

A higher premium raises the savings, because more employee premium moves before tax. Our FICA tax savings guide shows the math. The employer share of FICA is 7.65%, so employee premium contributions of about $457 a month per employee cover the $35 fee on their own.

How do you decide between a $0 deductible plan and a plan with a deductible?

Compare total yearly cost, not only the monthly premium. Use the premium gap, the likely claims of your group and the cost of the out-of-pocket maximum.

Ask your broker for these items on each quote:

• The monthly premium for each coverage tier
• The deductible and copay schedule, including hospital and specialist costs
• The out-of-pocket maximum
• Whether the plan is HSA compatible
• The rate at the next renewal, since premiums are rising. See health insurance premium increases by state.

Then run the numbers for your team in the Section 125 savings calculator. If you are comparing plans and want a second opinion, the consultation form below goes to a benefits expert, not a sales queue.

Frequently Asked Questions

Sources: KFF, 2025 Employer Health Benefits Survey, Summary of Findings (2025); IRS Rev. Proc. 2025-19, 2026 HSA and HDHP inflation adjusted amounts (2025), via Thomson Reuters Tax and Accounting; Milliman, 2027 ACA out-of-pocket maximum limits for group health plans (2026); HealthCare.gov, Health coverage for small businesses (2026); IRS Publication 15-B, Employer's Tax Guide to Fringe Benefits (2026).