CHOICE Act

S. 2875, the Custom Health Option and Individual Care Expense (CHOICE) Act, would amend tax law to codify and formalize a type of employer health benefit arrangement. Under this bill, employers could establish CHOICE arrangements—essentially tax-advantaged accounts that reimburse employees for the cost of individual health insurance they purchase on their own, rather than providing traditional group health plans.

If enacted, the bill would allow employers to set a fixed annual contribution amount that employees could use to pay premiums for individual market health insurance plans, including those available through the Affordable Care Act Marketplace. Employees would maintain ownership of their chosen plans, potentially allowing them to keep coverage when changing jobs. The bill would also provide tax credits to employers that offer these arrangements. These changes would take effect for plan years beginning after December 31, 2025.

Proponents argue the bill provides flexibility for both employers and employees by allowing workers to choose their own insurance plans rather than accepting employer-selected coverage. Critics raise concerns that the arrangement could allow employers to steer certain groups of workers—such as lower-income or higher-cost employees—toward individual market coverage while reserving traditional group plans for others. The bill is currently in the Senate Finance Committee and has not yet been voted on by the full chamber.