What Is the ‘One Big Beautiful Bill’ and What Does It Mean for Health Benefits?

Implications of CHOICE Arrangements

A significant aspect of the OBBB is the implementation of CHOICE Arrangements, which stands for Custom Health Option and Individual Care Expense, a rebranded version of ICHRAs. While the core structure of ICHRA would remain intact, the proposed CHOICE model would increase flexibility and address some of the administrative and regulatory limitations that employers currently face.

Greater plan design flexibility

CHOICE Arrangements may provide more options in how employers structure reimbursement levels and integrate benefits with other programs like HSAs or DPC. This could lead to more personalized and cost-effective plans that reflect the needs of diverse workforces.

Simpler compliance and setup

Proposed changes aim to streamline some of the notice and reporting requirements that have made ICHRA adoption more complex, reducing administrative complexity for employers.

Tax credit for small employers

To help more small businesses explore flexible benefit options, the bill proposes a temporary tax credit for employers that aren’t classified as Applicable Large Employers (ALEs). If a qualifying business offers a CHOICE Arrangement for the first time, they could receive a monthly credit for each employee who enrolls, starting at $100 per person in year one and decreasing in the second year. For many small businesses that can’t afford traditional group plans, this could be a meaningful way to offset the initial costs of offering health benefits.

Pre-tax premiums for Exchange plans

One of the most impactful updates in the bill is a proposed change that would allow employees to pay for individual health insurance plans purchased through the Exchange using pre-tax dollars. Right now, pre-tax deductions are only allowed for certain types of coverage, like Medicare or off-Exchange plans. This change would bring ACA marketplace plans into the fold, potentially lowering out-of-pocket costs for employees and giving employers more flexibility in building a benefits strategy around those plans.

Shorter employee notice window

The current ICHRA rule requires employers to notify employees 90 days before the start of coverage. CHOICE Arrangements would shorten this to 60 days, easing administrative pressure and giving employers more flexibility in their benefits rollout.

What's Next for The One Big Beautiful Bill

As of now, the One Big Beautiful Bill is expected to move to the House Rules Committee, with efforts underway to schedule that step before the Memorial Day recess. If it advances, the bill will then proceed to the full House for a vote, followed by review in the Senate. The White House has indicated a target date of July 4, 2025, to see the bill finalized. If passed, most health benefit provisions would take effect for plan years beginning January 1, 2026, giving employers time to plan ahead.

This legislation is still evolving, and its provisions could change as it moves through the legislative process. At Vitable Health, we're closely monitoring each development to keep you informed about how potential policy shifts may impact your business and your employees.

Whether you currently offer health benefits such as ICHRA plans or are evaluating your benefits strategy for the first time, Vitable is here to support you. We help employers navigate changes in the healthcare landscape and build flexible, affordable benefit solutions that meet the needs of the American workforce.

Final Thoughts

At Vitable, we believe the One Big Beautiful Bill moves us closer to a more equitable, consumer-friendly healthcare system. Codifying CHOICE Arrangements is a major step, but we urge lawmakers to go further. The future of healthcare lies in enabling real choice—not just for employers, but for every American worker.

Have questions? Reach out to our team using the form below or follow our blog and our LinkedIn for the latest updates as this legislation progresses.

Timeline and Current Status of the One Big Beautiful Bill (as of May 20, 2025)

The One Big Beautiful Bill (OBBB) didn’t appear overnight—it’s the result of several years of evolving healthcare and tax policy discussions. While its name might sound lighthearted, the bill itself tackles some heavy-hitting reforms that could reshape tax codes and healthcare benefits for years to come.

Here’s a look at how we got here and where things stand as of May 20, 2025.

A Look Back: How the One Big Beautiful Bill Took Shape

• 2017: Trump’s Tax Cuts Become Law: The Tax Cuts and Jobs Act (TCJA) lowered tax rates and expanded credits, but many provisions expire in 2025, prompting calls for permanent reform.

• 2023: CHOICE Arrangement Act Introduced: A failed attempt to codify and expand ICHRA. Though it didn’t pass, it laid the groundwork for healthcare provisions in the OBBB.

• Early 2024: Drafting of a Broader, Bipartisan Bill Begins: Lawmakers began developing a broader, bipartisan bill combining tax and healthcare reforms.

Key Milestones in 2025

• January 2025: The "One Big Beautiful Bill" Is Born: GOP leaders unveil the “One Big Beautiful Bill” as a reconciliation package to combine major reforms.‍
• February 25, 2025: The House passed a budget resolution (H. Con. Res. 14) that set the stage for reconciliation, the procedural tool needed to move the OBBB forward without needing 60 Senate votes.‍
• April 28, 2025: House Republicans released the full text of the One Big Beautiful Bill (excluding tax sections).‍
• May 12, 2025: The tax provisions were officially released, detailing proposals like extending Trump-era tax cuts, revising HSAs, and increasing family-related credits.‍
• May 16, 2025: The House Budget Committee initially rejected the bill (16–21 vote) due to cost and policy scope.‍
• May 18, 2025: The bill advances after revisions with a narrow 17-16 vote, allowing the bill to move forward.‍
• May 20, 2025: Former President Trump met with House Republicans to urge support for the bill.‍
• May 21, 2025: House Rules Committee scheduled to meet to finalize the bill’s terms for floor debate.

If OBBB passes the House, it faces challenges in the Senate, including reconciliation-related constraints under the Byrd Rule. Healthcare provisions like CHOICE Arrangements and HSA reforms are expected to survive scrutiny due to their budgetary relevance.

However, these provisions will not take effect immediately. Most will take effect for plan years beginning after December 31, 2025, meaning employers could begin implementing them starting January 1, 2026.

Implications for Employers and Healthcare Benefits

While much of the attention around the One Big Beautiful Bill (OBBB) focuses on tax reform, several proposed changes directly impact how employers offer healthcare benefits. For companies looking to control costs, attract talent, and offer more flexible options, these updates could mark a significant shift in benefits strategy.

Here’s how the bill could affect employers and the way they deliver health coverage:

More flexibility in plan design

The introduction of CHOICE Arrangements, an updated and rebranded version of ICHRA, could give employers greater freedom in how they support employee health coverage. Instead of being limited to traditional group health plans, businesses could reimburse employees for individual health insurance premiums and qualified medical expenses. This flexibility is especially appealing for employers with part-time, remote, or seasonal workers who may not benefit from a one-size-fits-all approach. We’ll dive a bit deeper into this topic below.

Encouragement of Direct Primary Care (DPC)

By formally recognizing Direct Primary Care (DPC) as a qualified medical expense and allowing it to be funded through HSAs, the bill could make it easier for employers to offer or subsidize access to DPC memberships. This model prioritizes preventive care and provider access, and can serve as an affordable alternative or complement to traditional insurance.

Learn more about DPC here.

Expanded use of Health Savings Accounts (HSAs)

Proposed changes to HSAs, such as increased contribution limits and expanded eligible expenses, would allow both employers and employees to take better advantage of tax-advantaged healthcare savings. For employers, this opens the door to offering more HSA-compatible health plans and encouraging employees to take an active role in managing their healthcare costs.

Opportunities for small and mid-sized businesses

Many of the healthcare-related provisions in the bill are designed with small and mid-sized employers in mind. CHOICE Arrangements, expanded HRAs support could help these businesses compete with larger organizations by offering affordable and customizable benefits packages.

Compliance and administrative considerations

While the bill aims to simplify benefit structures, any changes to healthcare law will require employers to stay up to date on compliance and reporting requirements. If the bill becomes law, HR and finance teams will need to review how these new models fit into existing benefit strategies and potentially partner with benefits providers to ensure smooth implementation.

Something big and beautiful is on the horizon in Washington that could have a major impact on employer-sponsored health benefits. Proposed by Senator Bill Cassidy and Representative Rick Allen, the bipartisan legislation, nicknamed the "One Big Beautiful Bill" (OBBB), is currently gaining traction for its bold attempt to reshape how Americans can access and afford healthcare. On May 18, 2025, the House Budget Committee held a rare Sunday night vote to advance the bill forward, signaling growing support across party lines. If passed, the bill could bring sweeping changes to employer-sponsored healthcare.

So what’s actually in the bill? How close is it to becoming law? And most importantly, how could it affect your business’s healthcare strategy moving forward? Keep reading for all the details!

TL;DR:

• What it is: OBBB is a tax and healthcare piece of legislation that includes major updates to tax policy and employer-sponsored benefits.
• Key healthcare provisions: Expands HSAs to include Direct Primary Care, introduces CHOICE Arrangements (an effort to codify and expand ICHRAs), and proposes new Medicaid work requirements.
• Important dates:
  • May 18, 2025: Advanced by the House Budget Committee
  • May 21, 2025: House Rules Committee scheduled to meet
  • July 4, 2025: White House aims for passage
  • January 1, 2026: If passed, most health benefit changes, including CHOICE Arrangements, would take effect at the beginning of 2026
• Why it matters for healthcare: The bill could create more flexible, affordable ways for employers to offer health benefits, especially for small and mid-sized businesses.
• Next steps: Still moving through Congress. Stay tuned, as provisions may change before the bill becomes law.

What Is the One Big Beautiful Bill?

The "One Big Beautiful Bill" (OBBB) is a proposed piece of legislation, primarily focused on tax policy, but also includes significant healthcare-related changes, that is being discussed and debated by the House of Representatives. While largely framed as a tax package, it also includes important updates to health benefits, such as changes to Medicaid eligibility, Health Reimbursement Arrangements (HRAs), Direct Primary Care (DPC) services, and Health Savings Accounts (HSAs).

A key component of the bill is the inclusion of the CHOICE Arrangement Act (an evolution of the 2023 CHOICE Arrangement Act), which aimed to codify and expand Individual Coverage Health Reimbursement Arrangements (ICHRAs). Though that earlier bill stalled, its ideas now reappear in the OBBB with renewed bipartisan momentum.

If passed, the OBBB represents a major shift in how policymakers are thinking about tax relief and employer-sponsored benefits, particularly those for hourly workers, contractors, and non-traditional employment structures. By expanding HSA usage and making ACA marketplace plans eligible for pre-tax premium payments through CHOICE Arrangements, the bill signals a long-term move toward a defined contribution model in healthcare, where employers provide funds and employees choose how to use them. This structure offers employees more personal control, particularly in industries with part-time or remote workforces.

But some experts believe the bill doesn’t go far enough. If the spirit of the legislation is to empower true consumer choice, then more regulatory barriers must be removed. As it stands, employers offering ICHRAs face limitations such as strict employee class requirements and restrictions on offering group plans alongside ICHRAs. Unlocking these restrictions could radically transform how workers engage with their health coverage.

Read the full bill here.

Key Provisions of the One Big Beautiful Bill Affecting Healthcare and Benefits

Here are some of the most notable elements of the bill that could change the way employers structure health benefits:

1. Medicaid Eligibility Changes

The bill proposes new “community engagement” rules that would require able-bodied adults without dependents to complete 80 hours per month of work, training, or volunteer service to keep Medicaid coverage. It also calls for more frequent eligibility verifications. The date for when it would go into effect is still to be determined. This could lead to more employees relying on employer-sponsored benefits if they lose access to Medicaid.

2. Premium Tax Credit (PTC) Reforms

The OBBB includes changes to how premium tax credits (PTCs) are applied under the Affordable Care Act (ACA). It would tighten eligibility rules and remove current limits on recovering overpaid advance PTCs. For employees who purchase individual health insurance through the ACA marketplace, this could make subsidies less predictable and increase the risk of owing money at tax time if income estimates are off. For employers, this may lead to increased interest in alternative coverage options like CHOICE Arrangements.

3. Expanded Health Savings Account (HSA) Options

This provision would raise HSA contribution limits and broaden what those funds can be used for. The goal is to give both employers and employees more flexibility when it comes to saving and spending on healthcare. It could also encourage more businesses to offer HSA-eligible health plans, giving workers more control over how they manage their medical expenses.

4. Making the Paid Leave Tax Credit Permanent

Currently, a temporary measure, the bill proposes long-term extensions to the paid family and medical leave tax credit, moving closer to a permanent fixture. That means employers would continue receiving tax incentives for offering these benefits long term, making it more attractive to support employees through important life events like the birth of a child or a serious illness.

5. CHOICE Arrangements: A New Take on ICHRAs

One of the biggest updates for employer-sponsored benefits is the introduction of CHOICE Arrangements—an evolved version of ICHRAs. These arrangements would build on the 2020 HRA rules, giving employers more flexibility to reimburse workers for health coverage on the individual market instead of offering a traditional group plan. It’s a modern, tax-advantaged approach that could be especially useful for companies with diverse or distributed workforces.

Other Key Tax and Economic Provisions in the OBBB

While healthcare is a major focus, the bill also includes several broader tax-related proposals that could impact workers and businesses across industries:

1. Permanent Individual and Business Tax Cuts: Over $5 trillion in tax cuts are being proposed, aiming to make the 2017 Tax Cuts and Jobs Act provisions permanent for individuals and businesses.
2. Standard Deduction Increase: Joint filers could see a temporary increase in the standard deduction by $2,000 to help reduce taxable income for middle-class households.
3. Deduction Cap Increase for State and Local Tax: The state and local tax (SALT) deduction limit would rise from $10,000 to $30,000 for families making under $400,000 annually.
4. Expanded Child Tax Credit: The Child Tax Credit would temporarily increase by $500, raising it from $2,000 to $2,500 per child.
5. Auto Loan Interest Deduction: American-made car owners could see temporary relief through a deduction of up to $10,000 for interest paid on loans for vehicles assembled in the United States.
6. Tip, Overtime, and Social Security Tax Exemptions: The bill proposes removing income taxes on tips, overtime pay, and Social Security income, particularly beneficial for service industry workers and seniors.
7. SNAP Program Changes: OBBB would shift more of the cost of Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps, to states and expand work requirements for recipients up to age 64.
8. Tax-Advantaged Savings Accounts for Newborns: A pilot program called Money Accounts for Growth and Investment, nicknamed “MAGA accounts,” would create tax-advantaged savings accounts, seeded with $1,000, for babies born between 2025 and 2028.

‍