If you’re familiar with Individual Coverage Health Reimbursement Arrangements (ICHRAs), there’s a new name to know: CHOICE Arrangements.
The Centers for Medicare & Medicaid Services (CMS) recently announced the new name for ICHRAs as part of an effort to increase awareness of this alternative to traditional group health coverage. While the terminology has changed, the basic structure remains the same.
What Is a CHOICE Arrangement?
A CHOICE Arrangement allows an employer to provide employees with a fixed amount of tax-free money to purchase qualifying individual health insurance rather than offering one traditional group health plan. It can also help reimburse for qualified expenses under Section 213(d) of the IRC.
For employers, this approach can provide greater control over health benefit spending. For employees, it offers the ability to select coverage based on factors such as premiums, deductibles, prescription coverage, provider networks, and their families’ healthcare needs.
Why Should Brokers Pay Attention?
The new CHOICE name may lead more employers to ask about this benefit strategy, particularly those facing rising group health plan costs, managing employees across multiple states, or considering offering health benefits for the first time.
That creates an opportunity for brokers to help clients evaluate whether a CHOICE Arrangement makes sense for their workforce. In fact, CMS specifically notes that agents and brokers can help employers understand eligibility requirements, coverage options, and costs when comparing CHOICE Arrangements with traditional group coverage.
More Flexibility for Employers
CHOICE Arrangements also give employers flexibility in how they structure their benefits. Employers can offer an arrangement to their entire workforce or to certain permitted employee classes, such as full-time, part-time, seasonal, salaried, or hourly employees.
Contribution strategies can also vary. Employers may provide the same amount to eligible employees or, within federal guidelines, adjust contributions based on factors such as age and the number of covered dependents.
For brokers, these options create opportunities to help employers build a benefit strategy around their workforce, budget, and coverage goals.
The takeaway is simple: ICHRA may have a new name, but the conversation is bigger than branding. As awareness of CHOICE Arrangements grows, understanding how they work can help brokers guide clients through another option for structuring employee health benefits.
