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.

What is the difference between Medicaid and CHIP?

Medicaid provides health coverage for eligible low-income individuals and families, including adults, children, pregnant individuals, seniors, and people with disabilities. In contrast, CHIP is primarily for children and certain pregnant individuals whose household income is too high to qualify for Medicaid but too low to comfortably afford private health insurance.

Can you have Medicaid and private health insurance at the same time?

Yes. In some situations, individuals can have Medicaid and another form of health insurance simultaneously. When this happens, Medicaid may help pay for certain medical costs the primary insurance plan doesn’t cover. However, coordination of benefits rules may vary depending on the type of private coverage the individual has and their state requirements.

What income levels qualify for Medicaid?

Medicaid income limits vary by state, household size, and eligibility category. Most states use modified adjusted gross income (MAGI) to determine eligibility for children, parents, and many adults. In states with Medicaid expansion due to the Affordable Care Act (ACA), adults with household incomes up to 138% of the federal poverty level may qualify.

Can adults qualify for CHIP?

CHIP is primarily for children younger than age 19. However, some states allow certain pregnant individuals to qualify for CHIP coverage.

Can employees with Medicaid participate in an ICHRA?

No. While Medicaid counts as minimum essential coverage (MEC), the federal government doesn’t consider it qualifying individual health insurance, which is necessary to participate in an ICHRA. Employees must enroll in an eligible individual health plan to use their ICHRA benefit.

Does an ICHRA affect CHIP eligibility?

It can. A child's eligibility for CHIP may depend on whether the employee's ICHRA meets affordability standards. Because CHIP rules differ by state, employees should contact their state's Marketplace or Medicaid agency to determine how an ICHRA offer affects their family's eligibility.

What is the CHOICE Arrangement?

By Chase Charaba on Sep 3, 2026, 5:10:00 PM

The Centers for Medicare & Medicaid Services (CMS) and the Small Business Administration (SBA) announced that the individual coverage health reimbursement arrangement (ICHRA) is now called the CHOICE Arrangement, effective September 3, 2026. The announcement came at an event in Indiana alongside Hancock Health, a Remodel Health client, where we were one of only two ICHRA administrators present¹.

The CHOICE Arrangement is an employer-funded health benefit that enables employers to provide their employees with a tax-free contribution toward qualified individual health insurance premiums².

In this article, we’ll cover:

How the CHOICE Arrangement works
How the CHOICE Arrangement compares to ICHRA
How this rebrand differs from previous congressional efforts using the same name

Organizations can take advantage of a CHOICE Arrangement today. Learn all about the benefit formerly known as ICHRA in our ultimate guide.

How does the CHOICE Arrangement work?

The rising cost of traditional group health insurance has made offering health benefits challenging. A CHOICE Arrangement allows employers to control their budgets while complying with the Affordable Care Act (ACA).

With the CHOICE Arrangement, employers offer their employees a tax-free defined contribution for individual health insurance. Employees get to choose the individual health plans that best work for their needs, based on their doctors, prescriptions, and budget. This flexibility is why the CHOICE Arrangement has become a popular alternative to group plans.

Here are the basic steps to a CHOICE Arrangement:

The employer establishes a set monthly contribution amount
Employees who opt into the benefit enroll in qualifying individual coverage
Payments or reimbursements for premiums are tax-free

CHOICE Arrangements are available to organizations of all sizes, including small businesses and enterprise groups. Organizations with 50 or more full-time equivalent employees (FTEs) can use a CHOICE Arrangement to satisfy the ACA’s employer mandate. To do so, they must offer an affordable CHOICE Arrangement contribution to at least 95% of their full-time employees and dependents.

Who can participate in a CHOICE Arrangement?

Employers can offer a CHOICE Arrangement to their entire workforce or limit it to specific groups, using 10 employee classes and any combination of those recognized under the ICHRA final rules, such as full-time and part-time employees. W-2 employees and retirees are eligible to participate in an HRA, but you can’t offer a CHOICE Arrangement to independent contractors or non-W-2 business owners, such as S corp owners with more than 2% ownership of the business.

To participate in the benefit, employees must enroll in qualifying individual health insurance coverage. This includes ACA-compliant individual plans on the Marketplace, ACA-compliant individual plans purchased off-exchange, Medicare Parts A and B together, or Medicare Part C, also known as Medicare Advantage.

How do CHOICE Arrangement contributions work?

Employers can customize CHOICE Arrangement contributions across 10 employee classes (or a combination of them). Within each class, they can also vary contributions by age (up to a 3:1 ratio from the youngest to the oldest employee) and by family size. This reflects the fact that individual health insurance premiums typically rise with age and dependents.

How does the CHOICE Arrangement compare to ICHRA?

CHOICE Arrangements and ICHRAs are the same. CHOICE is just a new name for the benefit that better reflects the choice it provides employees.

President Donald Trump issued an executive order in 2017, aiming to expand HRAs, which ultimately culminated in the 2019 ICHRA final rules issued by the Departments of the Treasury, Labor, and Health and Human Services³. These final rules and earlier regulations, as outlined in IRS Notice 2002-45, still govern the CHOICE Arrangement.

What ICHRA's rebrand as CHOICE means for brokers and employers

The name change from ICHRA to CHOICE Arrangement doesn’t impact how the benefit works. Benefits consultants and employers that already offer an ICHRA don’t need to make any changes right now. However, this renaming reflects regulators’ long-term confidence in the benefit's future. Rather than keeping the old name, CMS and the SBA decided to rebrand the benefit in hopes of increasing its appeal.

The CHOICE Arrangement supports a continued shift toward portable, consumer-driven health coverage.

What is the status of congressional attempts to codify the CHOICE Arrangement?

The CMS and SBA rebrand is separate from other, ongoing efforts in Congress to codify the benefit into federal law.

On December 17, 2025, the U.S. House of Representatives passed its second bill of that year that looked to codify ICHRA as the CHOICE Arrangement⁴. This signals that Congress increasingly views this benefit as a permanent part of the employer health landscape.

The Lower Health Care Premiums for All Americans Act included a provision that would codify the CHOICE Arrangement as the Custom Health Option and Individual Care Expense Arrangement⁵.

H.R. 6703 retains most of the policy framework from the earlier draft, which was cut from H.R. 1, the “One Big Beautiful Bill Act” (OBBBA), and expands on the ICHRA final rules. While this bill hasn’t become law yet, it did promise numerous enhancements to the benefit.

The most important change that would occur should the bill become law is the codification of the ICHRA in federal statute under the CHOICE Arrangement name. This would preserve the core structure of the ICHRA in federal law, reducing concerns around future presidential administrations making unilateral regulatory changes to the benefit.

While the CHOICE Arrangement is secure as is, having survived two presidential administrations so far, this would provide peace of mind to those concerned about the long-term viability of the benefit.

After the bill passed in the House of Representatives on December 17, 2025, it headed to the Senate for consideration. The Senate took possession of the bill on December 18, 2025, but adjourned for the holidays until January 6, 2026. It hasn’t taken up a vote on the bill since then.

What did the 2025 CHOICE Arrangement bills seek to accomplish?

Here’s what the bill would add to Section 9815(b) of the Internal Revenue Code of 1986:

Directly adds the CHOICE Arrangement as an exception under self-insured group health plans: “For the purposes of this subchapter, a custom health option and individual care expense arrangement shall be treated as meeting the requirements of section 9802 and sections 2704, 2711, 2713, and 2715 of title XXVII of the Public Health Service Act.”
Defines the CHOICE Arrangement as “a health reimbursement arrangement, which is an employer-provided group health plan funded solely by employer contributions to provide payments or reimbursements for medical care subject to a maximum fixed dollar amount for a period, under which such payments or reimbursements may only be made for medical care provided during periods during which the individual is covered under individual health insurance coverage (other than coverage that consists solely of excepted benefits), or under part A and B of title XVIII of the Social Security Act or part C of such title.”
Codifies existing ICHRA rules, including nondiscrimination requirements, substantiation requirements, and notice requirements.
Outlines the CHOICE Arrangement employee classes and reaffirms that an arrangement won’t fail to be treated as provided on the same terms within an employee class because of family status contributions (such as more for employees with dependents) or age (on a 3:1 ratio from the youngest to oldest employee).

In addition to codifying the benefit, the bill includes proposed enhancements.

Reduces the notification period for ICHRA

Under the 2019 ICHRA final rules, employers should generally provide a notice to employees about the ICHRA and their rights and obligations at least 90 days before the benefit start date.

The new bill would shorten this requirement to 60 days. It also adds exceptions for new hires and new employers established fewer than 120 days before the beginning of the plan year.

These changes would present easier onboarding timelines and better alignment with real-world hiring and benefit plan launches. It would also align with the 60-day special enrollment period (SEP) that employees would become eligible for after the offer of the ICHRA benefit.

Tax parity improvements

Another major change to the ICHRA as the CHOICE Arrangement is how it relates to taxes, namely pre-tax deductions and W-2 reporting.

First, let’s examine the potential changes to pre-tax deductions through a Section 125 cafeteria plan. Currently, employees with an ICHRA can only make pre-tax deductions through a Section 125 for their share of their individual health insurance premiums for off-exchange plans. If an employee’s off-exchange insurance premium is more than their ICHRA contribution, they can pay for the rest through salary reductions.

H.R. 6703 would create a new exception to the rule, which currently prohibits pre-tax cafeteria plan deductions for on-exchange coverage. This would allow employees with on-exchange individual plans and a CHOICE Arrangement to use pre-tax deductions for their share of their premiums.

This creates a better employee experience for those with on-exchange plans, who must currently wait for reimbursement for their premiums and pay their portion of the cost upfront.

Section 103 of H.R. 6703 states, “Section 125(f)(3) of [the Internal Revenue Code] is amended by adding at the end the following new subparagraph: (C), exception for participants in choice arrangement. Subparagraph (A) shall not apply in the case of an employee participating in a custom health option and individual care expense arrangement (within the meaning of section 9815(b)(2)) offered by the employee’s employer.”

The bill would also establish required Form W-2 reporting for the CHOICE Arrangement. H.R. 6703 would amend Code §6051. Currently, the final rules don’t require employers to report ICHRA contributions on employees’ W-2s. This change would bring the CHOICE Arrangement more in line with reporting requirements for the qualified small employer HRA (QSEHRA), which currently requires W-2 reporting. In both cases, this is informational reporting only, as contributions are tax-free.

Group plan coordination for small businesses

The ICHRA final rules allow organizations to offer both the ICHRA and a traditional group health insurance plan. However, employers can’t offer these benefits to the same class of employees or give them a choice between the two benefits. This means an employer can offer an ICHRA to some classes, like hourly employees, while offering a group plan to another class, like salaried workers.

However, H.R. 6703 could allow small employers to offer both a small group plan and an ICHRA to the same classes of employees. This could also provide employers with the structure to give employees the flexibility to choose which benefit they want to participate in.

Here’s what the bill says: “In the case of an employer who offers a group health plan provided through health insurance coverage in the small group market (that is subject to section 2701 of the Public Health Service Act) to all employees within such specified class, subclause (II) shall not apply to such group health plan.”

How Remodel Health can help you or your clients offer a CHOICE Arrangement

Remodel Health has helped lead the individualized benefits market since 2015 and has grown into the nation’s largest ICHRA administrator by revenue and team size. If you’re evaluating a CHOICE Arrangement for your organization or clients, our team can walk you through your options.

ClearChoice by Remodel Health is our premier benefits transformation model built into our CHOICE Arrangement program. You get a licensed team that guides organizations through the full benefits cycle, not just the transition from group. Employees can also shop for qualifying coverage directly from their Remodel Health accounts, and those with complex medical situations can meet with a licensed Benefits Advisor to discuss their options.

Learn more about ClearChoice by Remodel Health

CHOICE Arrangement FAQs

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.

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.

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

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.

This blog post was originally published on January 8, 2026. It was last updated on September 3, 2026 following the branding of ICHRA to CHOICE.