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.

5. What expenses can be reimbursed under a CHOICE Arrangement?

While details may change as the OBBB moves through Congress, CHOICE Arrangements would likely allow for the same tax-free reimbursement of individual health insurance premiums and qualified medical expenses. These may include copays, prescription medications, mental health visits, and other out-of-pocket costs, depending on how the employer structures the benefit.

Review ICHRA Eligible Expenses in 2025 Here.

6. Can small businesses offer CHOICE Arrangements?

Yes. One of the key goals of the proposed CHOICE model is to increase adoption among small employers. The bill even includes a two-year tax credit for small businesses that implement CHOICE, starting at up to $100 per enrolled employee per month in the first year.

7. Are CHOICE Arrangements ACA-compliant?

CHOICE Arrangements are designed to be compliant with the Affordable Care Act (ACA) if structured properly. They must meet affordability and coverage requirements under the employer mandate for ALEs.

8. How is CHOICE different from an ICHRA or QSEHRA?

CHOICE builds on ICHRA by adding optional pre-tax payroll contributions for ACA premiums and offering a small business tax credit. Qualified Small Employer HRAs (QSEHRAs) remain limited to small employers and have lower reimbursement caps.

9. Can employees still get subsidies if enrolled through a CHOICE Arrangement?

No. As with ICHRAs, employees offered a CHOICE Arrangement are generally not eligible for ACA Marketplace subsidies.

10. Are CHOICE Arrangements available now?

No, CHOICE Arrangements are not currently available. They are part of a proposed bill referred to as The One Big Beautiful Bill (OBBB), still working its way through Congress. If passed in 2025, implementation could begin as early as plan year 2026.

11. Will employees be able to pay for ACA Marketplace premiums pre-tax under CHOICE?

If the bill passes, yes. One proposed enhancement to CHOICE Arrangements is allowing employees to pay for ACA Marketplace premiums on a pre-tax basis through payroll—something not currently allowed under ICHRA.

12. What steps do employers need to take to implement a CHOICE Arrangement?

Once available, employers would need to select eligible employee classes, determine contribution amounts, provide required notices, and coordinate with payroll for reimbursements or pre-tax deductions.

13. Where can I get help setting up a CHOICE Arrangement?

Vitable can help! As a health benefits partner, Vitable guides employers through benefit design, implementation, and compliance, ensuring you’re prepared when CHOICE Arrangements become available.

Stay Informed and Get Support with Vitable

CHOICE Arrangements could represent a big step forward in how employers offer health benefits, especially for small businesses looking for flexibility, affordability, and compliance. But this is an evolving topic. As the bill moves through Congress, details may change, and we’ll continue updating this blog to keep you informed.

At Vitable, we make healthcare better for everyday workers by offering accessible, affordable care solutions that help businesses stay ahead of compliance and recruitment challenges. If you're exploring future benefits options or want support navigating the changing landscape, we're here to help.

Want to stay ahead of the changes? Reach out to our team using the form below or follow our blog and our LinkedIn for the latest updates as this legislation progresses.

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