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.

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.

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