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.

Can employees use a CHOICE Arrangement to pay for individual dental or vision insurance?

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.

Can a small business offer a CHOICE Arrangement and a QSEHRA at the same time?

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.

Can employers offer a CHOICE Arrangement and an HSA at the same time?

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.

Was ICHRA renamed CHOICE?

Yes, CMS and the SBA announced that ICHRA is now called the CHOICE Arrangement during an event at Hancock Wellness Center in New Palestine, Indiana, on September 3, 2026. Remodel Health representatives were invited to participate in this announcement.

How does ICHRA’s renaming impact the benefit?

CMS renaming ICHRA as the CHOICE Arrangement should have little to no impact on how the ICHRA functions. The CMS and SBA announcement only shared a rebrand without new features, though additional changes could be on the way. The same Final Rules that currently apply to ICHRA still apply to the CHOICE Arrangement.

Should I start referring to ICHRA as the CHOICE Arrangement in communications with clients or employees?

Yes, we recommend using the new name and explaining that it was formerly called ICHRA in any conversations with clients or employees. Since the federal government is officially retiring the ICHRA name, it’s best to start using the CHOICE Arrangement in practice. However, we predict that both terms will be used interchangeably for the foreseeable future.

Do I need to update my plan documents right now?

CMS hasn’t shared any compliance deadlines for plan documents due to the rename.

Does this affect ACA employer shared responsibility provision compliance?

CMS did not announce any changes to affordability or minimum value rules for CHOICE Arrangements, previously known as ICHRA. The underlying compliance framework remains unchanged.

Does the CHOICE Arrangement impact QSEHRA?

No, ICHRA becoming CHOICE doesn’t impact the qualified small employer health reimbursement arrangement (QSEHRA). The QSEHRA is a stand-alone HRA for small businesses with fewer than 50 full-time equivalent employees (FTEs). Since Congress created QSEHRA, CMS’s actions don’t impact the benefit. It only applies to ICHRA.

When does this change to CHOICE take effect?

ICHRA became the CHOICE Arrangement immediately after the announcement. However, it will take time for the general public to stop using the ICHRA name in favor of CHOICE.

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.

Is ICHRA software enough to administer an ICHRA?

It can be, depending on your team's resources and the software provider's capabilities. ICHRA software can automate many administrative tasks, but your team may still be responsible for plan setup, employee questions, compliance, documentation, and ongoing administration. Employers with experienced benefits staff may be comfortable managing these responsibilities internally.

Is full-service ICHRA administration more expensive than software?

Full-service administration typically costs more than software alone because you're paying for both technology and professional support. However, the total cost should also account for the time your internal team spends managing the ICHRA. For growing companies with lean HR teams, outsourcing more administrative tasks can reduce internal workload and free up time for other priorities.

Is full-service ICHRA administration better for growing companies?

Full-service administration can be a strong fit for growing companies because ICHRA administration can become more complex as an organization adds employees, expands into new states, or develops more nuanced benefits strategies. Having technology and dedicated benefits professionals can help employers scale their ICHRA without putting all of the additional administrative work on their HR team.

What is the average ICHRA contribution?

According to Remodel Health's 2026 National ICHRA Report, average employer contributions vary significantly by industry and family status. For employee-only coverage, average monthly contributions range from approximately $441 to $730, while family contributions can exceed $1,400 in some industries.

How much should an employer contribute to an ICHRA?

There is no required minimum contribution for an ICHRA. However, applicable large employers with 50 or more full-time equivalent employees must offer an affordable ICHRA contribution to satisfy the Affordable Care Act's employer mandate. The right contribution depends on your workforce, budget, local insurance market, and benefits goals.

Can employers contribute different amounts to different employees?

Yes. ICHRAs give employers flexibility to vary contribution amounts based on factors permitted under federal IRS guidelines and the ICHRA final rules, such as employee age and family size. Employers can also offer different contribution amounts to eligible employee classes, like part-time and full-time employees.

Do employees usually enroll in the benchmark plan?

Not always. Many employees choose different carriers, provider networks, deductibles, or metal levels based on their healthcare needs and budget. The benchmark plan simply serves as a reference point for establishing employer contributions.

How does ICHRA compare to QSEHRA?

Both the individual coverage HRA (ICHRA) and qualified small employer HRA (QSEHRA) allow employers to offer tax-advantaged health benefits, but they serve different needs. ICHRA is available to employers of all sizes, while QSEHRA is only for small employers with fewer than 50 full-time equivalent employees (FTEs). The IRS also sets annual contribution limits for QSEHRA.

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