Was ICHRA renamed to the CHOICE Arrangement?

Yes. On September 3, 2026, CMS and the SBA announced that individual coverage health reimbursement arrangements (ICHRAs) would now be called CHOICE Arrangements. The name change didn’t fundamentally change how the employee benefit works; the existing ICHRA framework remains in place under the new name. Employers and benefits professionals may still encounter the term ICHRA because it remains common in the health benefits landscape and existing plan materials.

Is a CHOICE Arrangement cheaper than traditional group health insurance?

A CHOICE Arrangement can help employers control and predict their health benefits spending because the employer determines the contribution amount rather than paying the premium for a specific group health plan. However, costs depend on the employer's contribution strategy, workforce demographics, locations, and individual insurance market. Remodel Health can help you design a compliant CHOICE Arrangement that fits your budget.

How does a CHOICE Arrangement work for employees?

Employees receiving a CHOICE Arrangement contribution shop for and enroll in qualifying individual health insurance coverage. They can compare plans based on factors such as premiums, deductibles, provider networks, prescriptions, and expected healthcare needs. The employer then provides the defined contribution that employees can use toward their monthly plan premiums.

Can an employer offer both a CHOICE Arrangement and a group health plan?

Yes, an employer may offer a CHOICE Arrangement and traditional group health insurance at the same time. But under federal rules, employers must ensure employees in a specific class can access only one type of benefit. You can’t give your staff within the same class a choice between the group plan and the CHOICE Arrangement. For example, an organization could structure its benefits so that hourly employees receive group coverage while salaried workers receive a CHOICE Arrangement.

Does direct primary care replace health insurance?

No. Direct primary care generally covers primary care services but isn't health insurance. Individuals must purchase separate health insurance if they need coverage for other medical services, such as hospitalization, specialist care, and surgery.

Is direct primary care worth it?

It can be, especially for individuals who want access to routine care at an affordable, fixed price. However, those who need acute care and have the budget may want to consider enrolling in a major medical plan for emergency care or for chronic disease management.

Can you have a CHOICE Arrangement and direct primary care at the same time?

Yes. An employer can offer a CHOICE Arrangement and provide employees with access to a direct primary care membership. But employees who want to participate in the CHOICE Arrangement must still obtain qualifying individual health coverage to use the benefit; they can’t only have DPC.

Can a CHOICE Arrangement pay for direct primary care?

DPC membership payments are ineligible for reimbursement under a CHOICE Arrangement. This is because employees must enroll in ACA-compliant individual health insurance to use a CHOICE Arrangement, and DPC doesn’t count as individual coverage. However, depending on the plan design, a CHOICE Arrangement can reimburse many health expenses that DPC providers offer, such as annual physicals, clinical services, and flu vaccines.

Can you use an HSA with direct primary care in 2026?

Yes, as of January 1, 2026, individuals who have a DPC membership can contribute to an HSA and use their tax-free HSA funds to pay their DPC fees. However, under federal requirements, DPC fees must not exceed $150 per month for individuals or $300 per month for families to be eligible for HSA payment.

What is the CHOICE Arrangement?

The CHOICE Arrangement, formerly known as ICHRA, is an employer-sponsored health benefit. It allows employers to give employees a tax-free contribution for individual health insurance premiums and potentially other qualified out-of-pocket medical expenses, depending on the plan design.

Did the CHOICE Arrangement replace ICHRA?

The CHOICE Arrangement replaced the ICHRA name as of September 3, 2026. All ICHRA rules remain unchanged under the CHOICE Arrangement. If you already offer an ICHRA, you shouldn’t experience any disruption to your benefits.

Does the CHOICE Arrangement change how ICHRA works?

No. There are no immediate changes to the ICHRA with the new CHOICE Arrangement name.

Are employers required to switch from ICHRA to the CHOICE Arrangement?

No. The ICHRA final rules remain intact, so ICHRA plans that are current as of January 1, 2026, will continue to exist for the duration of their plan year. There’s no need for midyear changes or readoption. The federal government has simply rebranded ICHRA as the CHOICE Arrangement. Operationally, the two benefits are identical. Any additional requirements or enhancements would apply prospectively and would likely be implemented through future regulatory guidance.

How to offer ICHRA alongside other employee benefit programs

By Holly Bengfort on Sep 15, 2026, 12:00:00 PM

<span id="hs_cos_wrapper_name" class="hs_cos_wrapper hs_cos_wrapper_meta_field hs_cos_wrapper_type_text" style="" data-hs-cos-general-type="meta_field" data-hs-cos-type="text" >How to offer ICHRA alongside other employee benefit programs</span>

Offering health benefits doesn’t have to mean choosing between flexibility and a complete benefits package.

A CHOICE Arrangement, formerly known as an individual coverage health reimbursement arrangement (ICHRA), is a flexible health benefit solution that lets employers offer personalized health coverage while still providing other benefits employees value, like dental, vision, and life insurance.

In this article, we’ll explain how employers can incorporate a CHOICE Arrangement into a broader benefits strategy.

In this blog post, you’ll learn:

How a CHOICE Arrangement works alongside other employee benefit programs.
Which benefits employers can pair with a CHOICE Arrangement.
How an employer might structure a CHOICE Arrangement with dental and vision coverage.

What is a CHOICE Arrangement?

A CHOICE Arrangement (formerly ICHRA) is an employer-funded health benefit. It lets employers make tax-advantaged contributions that employees can use toward qualified individual health insurance premiums and, in some cases, other eligible out-of-pocket medical expenses.

Instead of choosing one group health plan for everyone, employers set an allowance and employees choose the qualified individual health plans that fit their needs.

Employees can have different coverage based on factors such as where they live, their preferred providers, their prescription needs, and their household situation.

But major medical coverage is only one part of a benefits package. Employers may still want to offer dental, vision, and other forms of ancillary coverage through traditional group plans.

Can you offer a CHOICE Arrangement with other benefits?

Yes. Employers can offer a CHOICE Arrangement (formerly ICHRA) alongside other employee benefit programs. The key is understanding that a CHOICE Arrangement addresses individual health coverage. You can continue to offer other benefits separately.

Consider an employer with 100 employees that currently offers a traditional group health insurance plan, along with group dental and vision coverage. At renewal, the employer is facing higher medical costs and wants to explore a different approach to health coverage.

Instead of replacing its entire benefits package, the employer could restructure its benefits like this:

Medical. The employer uses a CHOICE Arrangement to provide a monthly allowance that employees can use toward individual health insurance coverage.
Dental. The employer continues offering its existing group dental plan.
Vision. The employer continues offering its existing group vision plan.

By giving employees more flexibility in plan selection while maintaining familiar dental and vision benefits, employers can create a more personalized benefits experience that can support employee satisfaction.

Can you offer a CHOICE Arrangement and group coverage for different employee classes?

Yes. Employers can use different health benefit strategies for different employee classes, as long as the arrangement meets applicable eligibility and nondiscrimination requirements.

For example, an employer could offer a CHOICE Arrangement to its full-time employees while offering traditional group health coverage to a separate eligible employee class. This approach can give employers more flexibility to design benefits around the needs of different groups within their workforce.

Other benefits you can offer alongside a CHOICE Arrangement

Dental and vision are common examples, but employers can pair a CHOICE Arrangement with other benefits.

You can also offer:

Life insurance
Disability insurance
Accident insurance
Critical illness insurance
Retirement benefits
Wellness programs or gym memberships

Why combine a CHOICE Arrangement with other benefit programs?

Employers may choose a CHOICE Arrangement (formerly ICHRA) as part of their benefits model for several reasons.

Employees can have more choice in medical coverage

With a CHOICE Arrangement, employees can shop for individual health insurance that works for their circumstances instead of being limited to a single group health plan. Employees can choose coverage based on their individual health coverage priorities, such as their preferred doctors, prescription needs, family situation, and budget.

That choice can be significant. According to Remodel Health’s 2026 National ICHRA Report, employees on our platform selected an average of 14 unique health plans per organization, compared with the single plan design typically offered through a traditional group health plan.

Employers can take a defined-contribution approach

Group health insurance premiums increase from year to year, making it difficult for employers to predict their healthcare costs. KFF found that average employer-sponsored family premiums rose 6% to $26,993 in 2025, with workers contributing an average of $6,850. With a CHOICE Arrangement, employers aren't directly tied to annual group premium increases, giving them more control over their benefits budget. Instead, employers set their own contribution amount, creating opportunities for cost savings while still providing employees with meaningful health coverage.

Employers can keep ancillary benefits simple

Switching to a CHOICE Arrangement doesn’t necessarily mean changing every other benefit. An employer may decide that traditional group dental and vision plans still make sense for its workforce. Keeping those benefits in place can create continuity while the employer takes a different approach to medical coverage.

Employers can build a more flexible benefits strategy

Benefits don’t have to be one-size-fits-all. An employer can evaluate each part of its benefits package independently and choose the approach that best fits its workforce and budget.

What employers should consider when designing the package

Combining a CHOICE Arrangement (formerly ICHRA) with other benefits gives employers flexibility, but plan design still matters.

Employers should consider:

Affordability. Employers subject to the Affordable Care Act's (ACA) employer mandate should evaluate affordability.
Eligibility. Determine which employees are eligible for your health benefit and which employees are eligible for each ancillary benefit you offer.
Employee classes. Employers can vary contribution amounts based on 11 employee classes, such as full-time and part-time employees.
Employee communication. Employees need to understand that their medical coverage works differently from their dental or vision coverage. Clear communication can make the transition easier.
Benefits administration technology. Employers should work with knowledgeable professionals and use benefits technology that can simplify enrollment, premium payment processing, and compliance documents. A strong implementation and administration partner can also make the transition from traditional group coverage to a CHOICE Arrangement easier for both employers and employees.

Remodel Health makes the transition from group coverage to a CHOICE Arrangement easier. We guide you through benefit design, setup, employee education, and enrollment, and we handle automated premium payments and regulatory requirements.

Conclusion

A CHOICE Arrangement, formerly known as an individual coverage HRA (ICHRA), is a modern alternative to traditional group health insurance. By offering it alongside other forms of ancillary benefits, employers can build a benefits package that combines individual choice with familiar group coverage. The result is a more flexible approach to health benefits that works for both employers and employees.

Ready to make the switch? Remodel Health can help. Schedule a call today!

This blog post was originally published on November 19, 2024. It was last updated on September 15, 2026.

Frequently asked questions

Yes, employees can use a CHOICE Arrangement to pay for individual dental and vision insurance premiums or out-of-pocket costs, if their employer's plan design allows for it.

No. An employer generally can't offer both a CHOICE Arrangement and a QSEHRA to the same employees. Small businesses should evaluate which HRA best fits their benefits strategy.

Yes, but certain requirements apply. To contribute to an HSA, an employee needs an HSA-eligible HDHP, and the CHOICE Arrangement must be structured to avoid providing disqualifying coverage.