The federal government has rebranded Individual Coverage Health Reimbursement Arrangements (ICHRAs) as CHOICE Arrangements. A CHOICE Arrangement, is an employer-funded health benefit that reimburses eligible employees for health insurance premiums purchased on the individual market and, depending on the employer’s plan design, other qualified medical expenses. CHOICE stands for Custom Health Option and Individual Care Expense.
Why Is ICHRA Being Called a CHOICE Arrangement?
The Centers for Medicare & Medicaid Services (CMS) and the Small Business Administration (SBA) introduced the CHOICE branding on September 3, 2026, as part of an effort to raise awareness of an employer health benefit they describe as being underused.
The new name also highlights one of the arrangement’s defining features: employee choice. With traditional group health insurance, the employer selects the plan or limited set of plans available to employees. With a CHOICE Arrangement, the employer provides a defined contribution and employees select qualifying individual coverage based on factors such as their doctors, prescriptions, premiums, and family needs.
The CHOICE name also gives employers and employees a more intuitive way to refer to a benefit historically known by the technical term Individual Coverage Health Reimbursement Arrangement (ICHRA). Along with the rebrand, CMS is providing educational resources to help employers understand costs, contribution structures, and administration options so they can more easily evaluate whether the arrangement fits their workforce.
Is a CHOICE Arrangement Different From an ICHRA?
No. A CHOICE Arrangement is the new name for an ICHRA, not a different type of health benefit.
The rebranding itself does not change the ICHRA compliance requirements. Rules for qualifying insurance coverage, employee classes, coverage verification, employee notices, and opting out still apply.
This explains why employers and employees may encounter both names. For example, the IRS’s HRA resource page lists an Individual Coverage HRA Model Notice. The older name does not indicate a different benefit.
Who Can Offer and Use a CHOICE Arrangement?
Employers of any size can offer a CHOICE Arrangement to eligible employees. The employer determines which employees are eligible within federal eligibility rules and whether eligible family members can also participate.
Employees and any family members covered by the arrangement must maintain qualifying coverage for each month they participate. Qualifying individual health insurance can be purchased through State and Federal Marketplaces or directly from an insurance carrier. Qualifying Medicare coverage consists of Parts A and B together or Medicare Advantage (Part C).
How Does a CHOICE Arrangement Work?
The process has three main steps:
- The employer establishes the benefit. The employer determines employee eligibility, sets the reimbursement amount, chooses which qualified expenses the plan will cover, and completes the ICHRA setup process in Salusion.
- The employee obtains qualifying coverage. When choosing a policy, employees can compare premiums, out-of-pocket costs for care, and access to their preferred doctors and hospitals. s. Employees who already have qualifying coverage do not need to select a different policy simply to participate.
- Eligible expenses are reimbursed tax-free. Insurance coverage and expense eligibility are verified before payment.
Brokers can help employers evaluate whether this approach or traditional group coverage better fits their workforce by comparing eligibility requirements, coverage options, and costs.
The Bottom Line
For employers and brokers, the practical takeaway is straightforward: CHOICE is a new name for an established ICHRA framework. The rebrand may make the benefit easier to recognize and evaluate, but the core decisions remain the same, including who is eligible, how much the employer contributes, which expenses are covered, and what qualifying coverage employees maintain.
As the CHOICE name becomes more widely used, employers and brokers may continue to see ICHRA terminology in existing guidance, plan materials, and government resources. Those materials remain relevant to the same underlying benefit.
For a deeper look at the arrangement itself, including its features and how it compares with traditional group health insurance, read Salusion’s What Is an ICHRA?.
