Renamed September 3, 2026 ยท Updated September 2026
What is a CHOICE Arrangement (formerly ICHRA), and what would it change for you?
The benefit you knew as an ICHRA has a new federal name. Here's what changed, what didn't, and when it beats a group plan.
Short answer: a CHOICE Arrangement (Custom Health Option and Individual Care Expense Arrangement) lets an employer reimburse employees tax-free for individual health insurance premiums instead of sponsoring a group plan. You set the contribution, so the budget is fixed by definition. On September 3, 2026, CMS and the Small Business Administration adopted CHOICE Arrangement as the federal name for what was called an ICHRA. That was an agency terminology change, not an act of Congress. The underlying regulations are unchanged, and existing plan documents stay valid.
What changed
Did the ICHRA rules change when it became a CHOICE Arrangement?
No. The regulations, the classes, the affordability test, the notice and the substantiation requirements are all the same. Only the federal name changed.
A lot of coverage of the rename is getting one thing wrong, so it's worth being precise.
| Question | Answer |
|---|---|
| Did Congress pass a law? | No. Bills to write the CHOICE name into federal statute have been introduced several times and none has become law. This was an administrative rebrand by CMS and the SBA |
| Do the rules change? | No. The ICHRA final rules still govern. Classes, affordability, notice and substantiation are the same |
| Do I need new plan documents? | No. Existing documents remain valid. Many will still say ICHRA, and that's fine |
| Which name should I use? | Both will circulate for a while. Carrier forms, IRS guidance and plan documents still say ICHRA in plenty of places |
| Is anything at risk? | A name adopted by agency action can be changed by agency action. The benefit itself rests on the regulations, not the label |
How it works
How does a CHOICE Arrangement (ICHRA) actually work?
Four moving parts. That's the whole mechanism.
| Step | What happens | Who decides |
|---|---|---|
| 1. You set the contribution | A fixed monthly dollar amount per employee, which may vary by age and family size within the rules | Employer |
| 2. Employees buy their own plan | On or off the individual market, in their own rating area, with their own network and their own doctors | Employee |
| 3. You reimburse, tax-free | Premiums, and if you allow it, qualified out-of-pocket medical expenses. No payroll tax, no income tax to the employee | Employer sets scope |
| 4. Employees substantiate | Proof they bought and kept qualifying coverage for the months reimbursed. Usually automated by the administrator | Employee, verified by the plan |
The part that changes the CFO conversation
There is no renewal. Your cost next year is the number you chose, not the number a carrier sends you in October. Trend risk moves off your budget. That is the entire pitch, and it's a real one.
When it wins
When does a CHOICE Arrangement beat a group plan?
Anyone who tells you it's always the answer is selling. Here's the honest split.
| It tends to win when | It tends to lose when |
|---|---|
| Your workforce spans several rating areas or states | The local individual market is thin, with one or two carriers |
| Turnover makes group participation minimums hard to hold | Employees strongly value one familiar network and a single card |
| The census is old enough that group age rating is punishing | The group's own claims experience is favorable enough that self-insuring it would be cheaper |
| You want a fixed budget number instead of a renewal negotiation | Leadership isn't ready to explain a shift from "our plan" to "your plan, our money" |
| You have a large part-time or variable-hour population | Nobody internally owns the affordability testing and notice work |
| You offer nothing today and want to start offering something | Your workforce is concentrated in one area with a strong group market |
More, not less
What would it take to give your people more, not less?
Here's the part most CHOICE Arrangement conversations skip. A defined contribution fixes your budget. It doesn't, on its own, make the benefit feel richer to the person using it.
That's the gap we fill. We layer a bundled care program on top of whatever funding structure you choose, so employees get more at the counter and in the app than they had before, while the employer's total cost goes down rather than up.
| What gets bundled in | What the employee pays |
|---|---|
| 2,400+ medication formulary Generics, over-the-counter, brands and specialty. Covers the whole household, not just the employee | $0 copay |
| Telehealth and virtual urgent care Unlimited visits, including medications prescribed through those visits | $0 copay |
| Behavioral and mental health Unlimited visits with licensed clinicians. Not coaches, not chatbots, and no session cap to ration against | $0 copay |
| Pain reduction and musculoskeletal care Physical therapy delivered at home. Back, neck, joint, post-surgical and pelvic health, without the clinic commute or the time off work | $0 copay |
| Cardiometabolic, diabetes and blood pressure support | $0 copay |
| Women's health | $0 copay |
| Accident protection Supplemental coverage that pays a fixed amount per covered event. Not major medical, and not a substitute for it | Employer-funded or voluntary |
| Wellbeing and navigation resources | $0 copay |
Every component is available a la carte. You take what fits your people and leave the rest. Nothing here requires a specific carrier, a specific funding structure, or waiting for your renewal.
What else does your household actually spend money on?
Health isn't the only line item squeezing your people. The same program carries member discounts on the services households reach for most, so the benefit keeps working on the days nobody is sick.
| Category | What it covers |
|---|---|
| Legal | Wills, landlord and tenant matters, family law, consultations and document review |
| Identity theft protection | Monitoring, alerts and restoration support when something goes wrong |
| Cyber protection | Device and household-level protection, breach response |
| Caregiver and dependent care support | Help for the employee carrying a parent, a child, or both at once |
| Pet care | Veterinary and routine pet expenses |
| Everyday household services | Commonly used consumer and household categories, and more |
What does an employer actually get out of it?
The cost math is the headline. It isn't the whole return.
| What changes | Why it happens |
|---|---|
| Lower plan cost | Savings come from unit price, contract terms and where care is delivered. Not from cutting what anyone is entitled to |
| Fewer days lost | Physical therapy at home and unlimited virtual visits remove the two biggest reasons care gets postponed: the commute and the copay. Postponed care is what turns a day into a week |
| Easier retention | A household filling maintenance prescriptions at $0 and reaching a licensed therapist without a waitlist is a household that notices what it would be giving up |
| Easier attraction | You can describe a benefit in one sentence a candidate understands. "Your prescriptions are free, for your whole family" lands harder than a deductible number |
| Less financial stress at work | Legal trouble, an identity breach and a sick parent all show up at the office whether or not anyone mentions them. Giving people somewhere to take those is cheap and it shows |
| Budget certainty | The whole program is funded out of savings it generates, so there's no new line item to defend in next year's budget |
Why employers work with us
No layoffs. No cuts to benefits. No disruption to your people, your systems or your processes. $0 upfront.
The program pays for itself out of the savings it generates, and savings are realized monthly against your own statements. Employers see budget freed on day 1, typically in the range of 15% to 25% of plan cost, reaching up to 20% to 30% with the full structure. Ranges are not additive and results depend on your census, claims history and enrollment.
99% of the brokers we talk to have never had visibility to these programs. They sit outside their commissioned channels. That isn't anyone's failing. The systems that surface options only surface what's already inside them.
Affordability
How does CHOICE Arrangement (ICHRA) affordability work?
It's a location calculation before it's a contribution calculation. The same dollar amount can be affordable in one county and unaffordable in the next.
An offer is affordable when the employee's cost for the lowest-cost silver plan in their rating area, minus your monthly contribution, falls at or below a percentage of household income set annually by the IRS.
That percentage is 9.96% for plan years beginning in 2026, set by the IRS in Revenue Procedure 2025-25. It's up from 9.02% in 2025 and it's the highest it has ever been, which works in the employer's favor. The percentage attaches to the plan year, not the calendar year, so a plan year that started in late 2025 keeps 9.02% until that year ends.
Individual market rates are set by rating area, and rating areas are usually built from counties. If your people are spread out, you have to run the test by location, not once for the company.
Get it wrong and two things happen: employees who should have been eligible for a premium tax credit lose it, and an applicable large employer picks up penalty exposure.
Run your own county
Our free lookup returns the rating area, the lowest-cost Silver premium by age, the number of carriers competing there and the approved 2026 rate change, for every county in all 50 states plus DC. No login, no form. Open the county affordability lookup
Questions
CHOICE Arrangement and ICHRA questions, answered
The questions employers ask most often about classes, affordability, tax credits and timing.
Is a CHOICE Arrangement the same thing as an ICHRA?
Is there a minimum company size for an ICHRA or CHOICE Arrangement?
Can I offer different amounts to different employees?
Can I run a CHOICE Arrangement alongside a group plan?
What happens to employees who were getting a premium tax credit?
What administrative work does this create?
Can I add benefits on top of a CHOICE Arrangement?
When can we start one?
Fifteen minutes, your current rate
If your health benefit budget stopped moving every October, what would you do with the certainty?
Enough to find out whether a CHOICE Arrangement, a level funded plan or a shelf-rated plan fits your people best.
Methodology and important disclosures
What this page is. General education about a federal benefit structure. It is not a quote, an offer of coverage, tax or legal advice, or a recommendation about what is suitable for your organization. Affordability, class design and notice obligations depend on facts this page does not know. Confirm your specific situation with your own counsel and tax advisor.
Terminology. CMS and the SBA adopted CHOICE Arrangement as the federal name for the individual coverage health reimbursement arrangement on September 3, 2026. That was an agency terminology change, not a statutory one, and the underlying ICHRA regulations are unchanged.
Program components. Bundled care components described here are available a la carte and vary by employer, state, group size and eligibility. Availability, covered services, visit terms and any utilization or clinical-appropriateness limits are set by each program and its published terms, not by this page. Where visits are described as unlimited, that reflects no per-member visit cap under the program terms and remains subject to clinical appropriateness and the program's own conditions of use. The medication count reflects the current formulary and is subject to change.
Member discounts. Legal, identity theft, cyber, caregiver and dependent care, pet care and household service benefits are discount and membership programs, not insurance. They do not pay providers, they do not coordinate with a health plan, and availability varies by state and by program.
Accident and supplemental products. Accident protection pays a fixed amount based on a covered event rather than on medical cost. It is not major medical coverage, is not minimum essential coverage, and is not a substitute for comprehensive health insurance.
Savings, retention and absenteeism. All savings figures are stated as ranges and reflect outcomes observed across engagements, rounded. They are not guarantees and not projections of your results. Savings from different levers are not additive. Statements about retention, attraction, absenteeism and workplace outcomes describe the mechanisms by which these programs are designed to work. They are not quantified performance claims and no specific result is promised.
Insurance placement. Any insured products referenced are marketed and offered through licensed agents in states where licensed. Save with Benefits provides education and program design. Last reviewed September 2026.
