What is an alternative health plan?
Published May 2, 2025
We've arrived at a precipice. The familiar, decades-old health plans that employers have relied on are falling short, creating an abyss between what was and what needs to be.
To bridge the gap between dissatisfied, frustrated employees and employers striving to meet their needs, alternative health plans (AHPs) are revolutionizing employer health and benefits offerings. While plans offered by Blue Cross Blue Shield, United Healthcare, Cigna, and Aetna (BUCAs) are the norm, AHPs offer a refreshing blend of simple benefit designs, better cost clarity, and often highlight virtual care options.
The need to provide employees with cost-effective benefits is coming to a head, with employers expecting healthcare costs to rise by an average of 9.2% in 2025, according to an Aon employer health survey1.
What is an Alternative Health Plan (AHP)?
Alternative health plans are a loosely defined group of plans offering alternatives to status quo employer plans like standard PPOs, HMOs, or HDHPs. These innovative health plans look to maximize member engagement, price transparency, and cost efficiency.
Some AHPs go further than benefit design and network changes to offer integrated care delivery models. By offering virtual care integrated within the plan, these plans can have unique advantages by providing super access to care, especially for certain groups of employees, such as those in rural or underserved communities.
Traditional health plans burden employees and employers alike
Deductibles have skyrocketed in recent years, increasing by 91% over the last decade. While high deductibles manage to keep premiums lower, employees remain at higher risk of serious health complications. This one-two punch of rising costs and ineffective plans spells it out for both employees and employers: innovative plan options are necessary to consider.
Why should you consider an alternative health plan?
Traditional plans offered by BUCAs are near-default choices for employers. But each point solution your benefits team works hard to provide adds up over time, and it becomes time to consider a new approach to employee health and wellbeing with AHPs.
Where do alternative health plans provide value?
Given the issues posed by rising healthcare costs, let’s look at how alternative plans can shield organizations and employees.
Employees may be more likely to engage with a health plan that prioritizes convenient virtual care options. Members can proactively address health issues with a care team readily available through telehealth capabilities.
In addition to increased engagement opportunities, alternative health plans also offer:
- Cost savings: From employees’ perspective, affordability is one of, if not the, most important factors determining member engagement with a health plan. For employers. alternative programs can drive 10-30% savings of an employer’s overall health plan spend.
- Access to care: Members who work in rural areas or who travel often can benefit from ready-made virtual connections with care team members. Following the COVID-19 pandemic, virtual care has stabilized and demand for virtual solutions remains strong.
- Better quality care: The combination of access to care, savings, and strong member engagement creates efficiencies that proactively address chronic conditions while reducing the high downstream costs typical for traditional plans. Alternative health plans can also offer members high-performance networks with providers across the nation.
How can your organization implement an alternative health plan (AHP)?
Fortunately, offering an alternative health plan doesn’t have to be a full overhaul of employee benefits at your organization. Identify areas where alternative plans can integrate into existing offerings, or offer alternative health plans as a slice of your full health and benefits offering.
Once your organization has identified possible alternative health plan solutions, inform employees about their options. Encourage greater employee interest by providing educational materials, hosting informative sessions, or leveraging testimonials from satisfied employees.
It may be important to ask yourself: why shouldn’t my organization consider an alternative health plan? Alternative health plans usher in the future of employee health and benefit offerings. Over a third of large employers (36%) are now using high-performance network plans or other medical plans2.
Your organization can attract top talent and retain its most valuable assets – people – by offering a flexible, cost-efficient alternative health plan.
Want to learn more about how AHPs can revolutionize employee health and benefit offerings?
References
- Aon. (2024). Key Trends in U.S. Benefits.
- Mercer. "The Majority of U.S. Employers Plan to Maintain Their Current Benefits in 2025."