What is a zero cost sharing plan?

Written by: Elizabeth Walker
Published on June 8, 2022.

American Indians and Alaska Natives face many healthcare inequalities from other Americans, such as high uninsured rates and barriers to finding proper care, which can lead to a poor overall health status.

These groups often have limited access to employer-sponsored health coverage due to a lower employment rate and working in jobs that don’t offer health benefits.

The government has created services to provide healthcare protections and services to American Indians and Alaska Natives, like the Indian Health Service (IHS), to alleviate some of these issues. The Affordable Care Act (ACA) also offers solutions to increase health coverage for American Indians and Alaska Natives, particularly with zero cost sharing plans.

Cost sharing is when patients pay a portion of their healthcare expenses that aren’t covered by their health insurance. But for American Indians and Alaska Natives eligible for zero cost sharing plans, there’s a greater opportunity for financial relief. Below we’ll go over what zero cost sharing plans are and what other health benefit options exist for those that don’t qualify.

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What is a zero cost sharing plan?

Zero cost sharing plans are for American Indians and Alaskan Natives with household incomes between 100% to 300% of the federal poverty level (FPL). These plans are purchased through the federal health insurance marketplace.

The federal health insurance marketplace determines eligibility for these plans. In addition to having their income level verified, participant eligibility also requires that applicants qualify for premium tax credits.

Other features of zero cost sharing plans include the following:

  • Services received from an Indian healthcare provider aren’t subject to out-of-pocket costs, like co-pays, deductibles, or coinsurance
    • Federal marketplace plans are also exempt from out-of-pocket costs
  • Patients aren’t required to get a referral from an Indian healthcare provider when requesting coverage for the ten essential health benefits through a Marketplace plan
  • Plans at any metal level (such as bronze, silver, gold, or platinum plan) are eligible for zero-cost sharing on the Marketplace

It’s important to note that participants in zero cost sharing plans aren’t exempt from paying their monthly premium. Premium amounts will vary based on the metal tier plan chosen for the plan holder and their dependents. Typically, bronze plans offer the lowest premiums, whereas a platinum plan is the highest.

However, the premium tax credits they qualify for can help them lower the amount of their premium to make the plan even more affordable.

What do zero cost sharing plans cover?

Zero cost sharing plans provide coverage to all essential health benefits needed to maintain good health and wellbeing. This means that basic checkups, preventative care, doctor consultations, medication, and most necessary forms of surgery are eligible for coverage under a zero cost sharing plan. Patients will pay no cost for covered benefits performed by participating providers.

Services and surgeries that are considered elective, such as cosmetic surgery, aren’t covered under these types of plans. To receive coverage, the treatment needs to have a justifiable reason for being performed.

Any procedures or treatments that don’t show a reasonable need won’t be covered and will have to be paid out of pocket if the patient wants it done.

When can employees enroll in a zero cost sharing plan?

If you have employees that meet the eligibility criteria for a zero cost sharing plan, they can submit their application on the federal marketplace website. Unlike other employees looking to enroll in a health insurance plan, American Indians and Alaska Natives can enroll in Marketplace coverage any time during the year, rather than waiting for the annual open enrollment period.

If needed, participants can change their health plan as often as once a month. This special protection means insurance coverage for these groups can start immediately and flexibility is guaranteed in the event of a health crisis.

Alternative health benefit options for employees that don’t qualify for a zero cost sharing plan

Zero cost sharing plans are great solutions for employers with American Indian and Alaska Native employees struggling to find affordable health coverage options. But what if you have employees that don’t meet the eligibility requirements?

Luckily, there are two affordable health benefit options that can meet any employer's needs, no matter their workforce's makeup or household income.

A health reimbursement arrangement (HRA) is a tax-advantaged, employer-funded health benefit that allows employees to be reimbursed for health insurance premiums and other qualified medical expenses.

Similarly, health stipends are gaining in popularity as a flexible way to boost your employees’ income to pay for their health insurance premiums and other necessary healthcare costs.

Let’s take a closer look at these health benefits so you can learn more about how they can work for your employees that may not qualify for a zero cost sharing plan.

Qualified small employer HRA (QSEHRA)

As the name implies, this first HRA is perfect for small employers. A QSEHRA is for employers that don’t offer group health insurance and have less than 50 employees. Like all HRAs, only employers can contribute funds and set the monthly allowance amount. However, QSEHRAs have annual contribution limits, so they are restricted by the IRS.

Employees with a QSEHRA can have healthcare expenses outlined in IRS Publication 502 reimbursed. Employers can limit the list of eligible expenses if they choose, but the process works the same way. Once an employee submits an eligible expense, they are reimbursed up to their allowance amount by their employer.

Full-time W-2 employees are automatically eligible for a QSEHRA. If you have part-time or seasonal employees, they can be eligible too as long as they receive the same allowance amount as the full-time employees.

Lastly, reimbursements are income tax-free for employees, as long as they have a policy that meets minimum essential coverage (MEC). For employers, all contributions are tax-deductible and free of payroll taxes.

Individual coverage HRA (ICHRA)

If you want even more flexibility from your health benefit, an ICHRA is an excellent choice. ICHRAs are for employers of any size, and they work similarly to a QSEHRA. By offering an ICHRA, you can reimburse your employees tax-free for health insurance bought on the individual market, so you can provide a benefit without offering a traditional group health plan.

With an ICHRA, you can set an unlimited monthly allowance amount for your employees to buy the healthcare items they need. But even better, you don’t have to offer all of your employees the same reimbursement amount. You can divide your workforce into 11 separate employee classes, each with its own reimbursement amount.

For example, if you have many American Indian and Alaska Natives that only work part-time, with employee classes, you can offer all your part-time employees more of an allowance than your full-time employees. Just remember you must provide the same amount of reimbursement to all employees in a class.

ICHRAs and premium tax credits can also work together, but it can be tricky. Essentially, employees can’t accept any premium tax credit they may be eligible for if they enroll in the ICHRA. They can only claim the credit if the ICHRA is considered unaffordable. So they may end up having to choose between claiming their tax credit or enrolling in the ICHRA benefit.

Integrated HRA

For employers of any size with a group health plan already in place, an integrated HRA, also known as a group coverage HRA (GCHRA), is specifically designed to work alongside an employer-sponsored coverage. However, employees must enroll in the group health plan to participate in the HRA plan.

An integrated HRA is a way for employees to pay for eligible healthcare expenses that aren’t fully paid for by their group plan, such as deductibles, coinsurance, and copays. The only non-eligible expense is the group health plan premium.

By supplementing your group health plan with an integrated HRA, you can offer a variety of affordable health plan types. For example, you can offer a bronze plan, typically high-deductible health plans (HDHPs), which usually have cheaper premiums.

These plans may be more budget-friendly for your American Indian and Alaska Native employees that don’t qualify for a zero cost sharing plan.

Like ICHRAs, employers also tailor their allowance amounts to fit seven different employee classes with an integrated HRA. This more customized option allows you to give your employees the best allowance amount to pay for the healthcare they need.

Health stipend

Although less formal than HRAs, employee stipends are another strong benefit alternative for organizations. A health stipend is a fixed amount of money provided by an employer to help their employees purchase health insurance and other medical expenses. Typically, this contribution is added into an employee’s wages as taxable income.

With a stipend, employees aren’t limited to a policy provided by their employer. But since stipends are less regulated, the employee can spend the money however they want. Employers can’t request evidence of coverage from employees to prove they’ve enrolled in an individual health plan.

Stipends make excellent options for organizations with many American Indian and Alaska Native employees, or any employees who are lower on the federal poverty line, who qualify for premium tax credits.

If the employee is offered an HRA, they may have to reduce their credits by their allowance amount, or forfeit their credits entirely to use their HRA. But with a stipend, there is more flexibility. Employees can participate in the stipend offering and still collect their full tax credit amount to make their health insurance premiums more affordable.


American Indians and Alaska Natives tend to have more difficulties getting good health insurance. The ACA has helped by increasing access to affordable health coverage with a zero cost sharing plan. But sometimes, an organization may have employees that don’t qualify for one of these plans.

If you’re an employer with non-eligible American Indian and Alaska Native employees, you should consider implementing an HRA or health stipend at your organization to ensure they have access to a formal and flexible health benefit. PeopleKeep has everything you need to get started—simply contact our sales team, and we’ll get your employees’ healthcare needs squared away in no time.

Originally published on June 8, 2022. Last updated June 8, 2022.


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