Choice Arrangement

H.R. 5463 would amend the tax code to establish a new framework called CHOICE Arrangements (Custom Health Option and Individual Care Expense). Under this proposal, employers would be able to provide health reimbursement arrangements (HRAs) that employees could use to purchase individual health insurance coverage on the open market, rather than traditional employer-sponsored group plans.

The bill would allow employers to contribute pre-tax dollars to these accounts, which employees could then use to help pay for individual health insurance premiums and medical expenses. The proposal includes requirements that employers provide written notice to employees about the arrangement at least 60 days before the plan year begins, and that all employees within a specified class receive the same terms. Smaller employers who offer these arrangements would be eligible for federal tax credits.

If enacted, the bill would give workers more flexibility to choose their own health plans while allowing employers, particularly small businesses, a potentially more affordable way to offer health benefits. Employees participating in these arrangements would still be able to purchase insurance through the health insurance marketplace. The bill is currently under consideration by the House Committee on Ways and Means.