For many employees, getting healthcare today can feel confusing and expensive. As costs keep rising, workers are trying to figure out when using their insurance makes sense and when paying cash for certain services may be simpler or cheaper. Employers are also watching these trends, since access to care affects productivity, retention, and overall wellbeing.
Healthcare costs keep rising
Employer-sponsored health insurance continues to grow more expensive each year. According to the KFF Employer Health Benefits Survey, average annual premiums reached $9,325 for single coverage and $26,993 for family coverage in 2025, increasing 5% and 6% over the past year.
On top of premium growth, many employees face higher deductibles. More than one‑third of workers are in plans with deductibles of $2,000 or more, which can make routine care feel out of reach early in the year.
At the same time, more individuals are receiving bills without insurance involvement. In fact, a 2025 analysis showed 35% of patient balances now come from care billed without insurance, and this portion has grown 8% year over year. These trends are explored further in our Employee Benefits State of the Market Outlook for 2026.
Cash pay vs insurance
A side-by-side comparison for employers and HR leaders
Use this table to evaluate when each approach serves employees best — and how to design benefits that make the most of both.
| Consideration | Cash Pay | Insurance |
|---|---|---|
| Direct payment to provider; no insurance involved | Premiums, deductibles, and copays in exchange for broad coverage | |
| Cost & Pricing | ||
| Routine care costs | Often lower; providers may discount for direct payment | Subject to deductibles and cost-sharing; may feel expensive early in the plan year |
| Price transparency | Upfront pricing common; easier to compare before receiving care | Costs often unclear until after claims are processed |
| Counts toward deductible / OOP maximum | Rarely — payments stay outside the plan | Yes — every dollar counts toward annual limits |
| Access & Coverage | ||
| Speed of access | Faster — no prior authorizations, network rules, or referrals | Can be delayed by authorization and network requirements |
| Chronic condition management | Financially unsustainable for ongoing medications and monitoring | Better suited — insurance covers recurring visits, prescriptions, and monitoring |
| Major / unexpected expenses | Significant out-of-pocket exposure; no protection ceiling | Core strength — deductibles and OOP maximums cap annual spend |
| Specialist & advanced care | Limited — costs can be prohibitive without coverage | Covered — access to complex diagnostics, specialty providers, and high-cost medications |
| Employee Experience | ||
| Administrative burden | Minimal — no claims, authorizations, or network lookups | Can be complex — referrals, claims processing, and EOBs add friction |
| Financial risk to employee | Higher — employee absorbs full cost if a minor issue escalates | Lower — insurance provides a safety net against unpredictable costs |
| Best suited for | Occasional, uncomplicated, one-time needs (lab work, imaging, virtual visits) | Ongoing, complex, or high-cost medical needs |
How to use this table: Each row compares how cash pay and insurance perform across a given factor. Neither option is universally better — the right choice depends on the type of care, the employee's plan, and their financial situation.
What employers can do
Employers can play an important role in helping employees navigate when cash pay makes sense and when insurance offers essential protection.
1. Understand your funding model
For self‑funded employers, small cash‑pay choices may trim claims, but most spend comes from a small group of high‑cost claimants. For those who are fully insured, premiums won’t change with members’ cash-pay behavior. Focus instead on employee education and access to improve health outcomes and lower costs.
2. Consider reference‑based pricing (RBP)
It pays hospitals a set Medicare‑based rate, similar to paying a cash price. With employee guidance, it can reduce costs without creating confusion.
3. Make transparency actionable
Make price transparency something employees can actually use. While hospitals now publish pricing in machine‑readable files, those files are too big and too technical for most people to use. What can help is giving employees simple tools, on their phone or laptop, that clearly show real prices for healthcare services ahead of time.
“True transparency means seeing the price before you get care. Just like when you shop in a store. That’s the only way people can make informed choices.” Advisor, The Baldwin Group
Where transparency is headed
New tools and plan designs are starting to bring price and value directly into the decision at the point of care. These offerings don’t replace traditional insurance; instead, they show how transparency is evolving to help employees make smarter, more confident choices.
Among two current examples available today:
Sidecar Health
- Uses market data to set a fixed allowance for each service based on zip code
- Members pay providers directly with a Visa card, making them essentially “cash payers”
- If they choose a lower cost provider, members can keep part of the savings
- Providers appreciate the immediate payment and reduced paperwork
Surest (UnitedHealthcare)
- Gives members up front prices for different providers and services before scheduling care
- Copays vary based on cost and expected outcomes, helping employees see which options offer better value
- Removes guesswork by showing costs in advance, rather than after claims processing
4. Teach negotiation and payment options
Many providers will discount for cash or set no‑interest payment plans. Employees need to know which providers can offer that, and when to ask for it.
How The Baldwin Group can help
At The Baldwin Group, we understand that designing benefits today isn’t about choosing between cash pay and insurance. It’s about using both intelligently. Our advisors take a strategic view of cost and access to help employers intentionally design benefits where cash‑pay options responsibly complement insurance and high‑value services are easier and more affordable to use. We also help employers stay ahead of rising premiums and regulatory change through smarter benefit design and clear guidance.
When we work together, you get:
- National brain trust, local relevance. Our firm gives clients access to a diverse bench of specialists across the country and real‑world solutions that have been used in different markets.
- Senior‑level access and consultative guidance. You work with experienced advisors who take a strategic view of cost, access, compliance, and employee experience, not siloed tactics.
- Actionable transparency at the point of service. We help implement tools and workflows that make prices visible when decisions are made, especially for routine health services, imaging, and prescriptions.
- High‑impact cost strategies done responsibly. From solutions that range from reference-based pricing to domestic medical travel and pharmacy price strategies, we focus on member experience and employer ROI.
- Clear communication for real behavior change. We translate plan rules into plain English and equip benefits teams with ready‑access to resources that can reduce confusion and delays.
Ready to simplify benefits decisions? Contact our team today or explore our employee benefits services.
This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. The content of this document is made available on an “as is” basis, without warranty of any kind. The Baldwin Insurance Group Holdings, LLC (“The Baldwin Group”), its affiliates, and subsidiaries do not guarantee that this information is, or can be relied on for, compliance with any law or regulation, assurance against preventable losses, or freedom from legal liability. This publication is not intended to be legal, underwriting, or any other type of professional advice. The Baldwin Group does not guarantee any particular outcome and makes no commitment to update any information herein or remove any items that are no longer accurate or complete. Furthermore, The Baldwin Group does not assume any liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. Persons requiring advice should always consult an independent adviser.
