Frequently Asked Questions About CHOICE Arrangements

In 2025, a new benefits model called CHOICE Arrangements, short for Coverage for Healthcare Options Intended to Expand, was introduced as part of the One Big Beautiful Bill (OBBB) currently moving through Congress. While it’s gaining traction among policymakers, it’s important to note that neither CHOICE Arrangements nor the OBBB has been passed into law yet. CHOICE is a proposed enhancement to the Individual Coverage Health Reimbursement Arrangement (ICHRA) that aims to modernize how companies support health coverage for their teams.

If passed, CHOICE Arrangements would allow employers to reimburse employees for individual health insurance premiums and, optionally, qualified medical expenses. It also introduces potential tax advantages for both employers and employees, including the ability to use pre-tax payroll contributions to pay for ACA Marketplace premiums—a feature not currently available under ICHRA.

However, with evolving legislation comes numerous questions. Let’s break down what we know so far.

What Employers and Employees Want to Know About CHOICE Arrangements

1. What is a CHOICE Arrangement?

A CHOICE Arrangement is a proposed enhancement to ICHRA that would allow employers to reimburse employees for individual health insurance premiums and qualified medical expenses, with added tax benefits and flexibility.

2. Who can offer a CHOICE Arrangement?

Any employer of any size could offer a CHOICE Arrangement if the bill passes, including small businesses and Applicable Large Employers (ALEs), as long as they don’t offer a traditional group health plan to the same class of employees.

3. How do CHOICE Arrangements work?

Employers set a defined contribution amount and reimburse employees for health insurance purchased on the individual market. Employees may also be able to pay premiums pre-tax through payroll if allowed under the final legislation.

4. Are CHOICE Arrangements replacing ICHRA?

Not exactly. CHOICE Arrangements are a proposed enhancement to the existing ICHRA model. While the name and structure are evolving, the core concept remains the same—employers reimbursing employees for individual health coverage. If passed into law, CHOICE would build upon and modernize ICHRA with added features and incentives.

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