Breitbart News reported on September 4, 2026, that the Trump administration had announced CHOICE Arrangements, a new name and outreach effort for Individual Coverage Health Reimbursement Arrangements (ICHRAs). Per that report, CMS Administrator Dr. Mehmet Oz and SBA Administrator Kelly Loeffler unveiled the program at a press event in Indiana, positioning it as a way for small employers to give workers a tax-advantaged monthly allowance to buy their own health insurance rather than sponsor a traditional group plan. Read the Breitbart report for the primary account.

Small employers that do not currently offer health coverage may want to compare an ICHRA with available group-plan options and their employees' individual-market choices.

What are CHOICE Arrangements?

CHOICE stands for Custom Health Option and Individual Care Expense. The arrangement uses the same instrument the Treasury, IRS, and Department of Labor jointly finalized in June 2019 under the name ICHRA.

According to the reported announcement, CMS plans to publish additional resources intended to help small employers evaluate and administer ICHRAs under the CHOICE name.

How the arrangement works:

• The employer picks a fixed monthly dollar amount to contribute per employee (or per class of employee).
• The employee shops for their own individual health insurance policy, typically on the ACA marketplace.
• The employer reimburses the premium (and, if the plan is designed that way, some out-of-pocket costs) up to the monthly cap.
• Under IRS guidance, qualifying ICHRA reimbursements can be excluded from an employee's income when the arrangement and coverage meet federal requirements.

The employer sets a reimbursement cap per eligible employee, although total spending can still change with headcount and administration fees. Because the coverage is an individual policy, an employee may be able to keep it after leaving the job, but the employer's reimbursements generally end and the employee remains responsible for maintaining coverage.

What is actually new in the 2026 announcement?

Two things, per the Breitbart report and the underlying legislative text.

First, CMS is publishing new implementation resources for small employers — guidance on costs, contribution structures, and third-party administrator selection. Breitbart described the announcement as a new name and outreach effort for ICHRAs; employers should consult current CMS and IRS materials for the governing rules.

Second, Rep. Andy Biggs's healthcare reform bill, introduced in December 2025, would codify the 2019 rule into statute and propose a first-year employer tax credit of $100 per employee per month for employers that adopt a CHOICE Arrangement. As introduced in December 2025, Rep. Andy Biggs's bill proposed a first-year tax credit of $100 per employee per month, but the proposal had not become law as of September 4, 2026. Readers should verify the bill's current text and status on Congress.gov before relying on the credit for planning.

The September 4 announcement appears to rename and promote the existing ICHRA framework; the proposed employer tax credit would still require legislation.

How could CHOICE Arrangements affect small-business employers?

Employer-sponsored family coverage can represent a significant expense for small businesses. KFF reported that the average annual premium for employer-sponsored family coverage reached $25,572 in 2024, with workers contributing an average of $6,296 toward that premium.

Offer rates track that cost. KFF reported that 53% of firms with fewer than 50 workers offered health benefits in 2024, compared with 99% of firms with 200 or more workers.

(These figures are from the most recent KFF Employer Health Benefits Survey available at the time of writing; check KFF for updated data.)

A CHOICE Arrangement changes the shape of the decision for a small employer:

• You commit to a monthly dollar amount you can budget for, instead of signing a group policy whose renewal rate you cannot predict.
• Employees who want richer coverage can top up out of pocket on the marketplace. Employees with a spouse's plan available may decline.
• Small-group participation minimums that disqualify very small employers from traditional plans do not apply the same way to an ICHRA.

The tradeoff: employees have to shop the individual market themselves. Provider networks vary by plan, so employees should confirm that their doctors and hospitals participate before enrolling. If retention depends on offering a specific hospital system in-network, a group plan may still be the right call.

Who is eligible for a CHOICE Arrangement?

Under the 2019 federal rule, an employer of any size can offer an ICHRA / CHOICE Arrangement. Three practical constraints matter, and each depends on the specific arrangement and employee circumstances — confirm details with a licensed benefits adviser:

1. You generally cannot offer the same class of employee both a traditional group plan and an ICHRA. The rule allows classes (for example, full-time vs. part-time, salaried vs. hourly, or distinct geographic rating areas) with different benefits, but the class definitions follow federal rules.
2. The employee must be enrolled in individual health insurance coverage (or, in certain cases, Medicare) for the reimbursements to be tax-free. A short-term plan or a health-sharing ministry does not qualify.
3. Employers must give employees a written notice ahead of the plan year describing the arrangement, the amount, and how it interacts with the premium tax credit. Confirm the applicable notice deadline with a qualified benefits adviser or administrator before selecting an effective date.

The IRS and CMS publish model notice language. Employers can ask a benefits administrator which notice, substantiation, and reimbursement tasks it handles and how it charges for those services.

How do the tax mechanics work?

For the employer:

• Contributions are generally a deductible business expense, the same as group premiums, subject to IRS rules.
• If the Biggs bill passes as introduced, employers adopting a CHOICE Arrangement for the first time would receive a $100 per employee per month federal tax credit for the first year. That credit is not law today.

For the employee:

• Qualifying reimbursements are excluded from gross income under IRS guidance, so they do not appear on the W-2 as taxable wages.

• IRS guidance explains that an employee offered an affordable ICHRA generally cannot claim the premium tax credit for Marketplace coverage for the months covered by that offer. Whether an arrangement counts as "affordable" depends on the lowest-cost silver plan in the employee's area and the employer's contribution.

Employers should model how the contribution would affect each employee's eligibility for marketplace premium tax credits with a licensed benefits adviser before adopting the arrangement.

How much could a CHOICE Arrangement cost a small employer?

A hypothetical arithmetic illustration only — not a market quote. Assume a three-person firm sets a contribution of $500 per employee per month for a plan year.

• Employer annual outlay: $500 × 3 × 12 = $18,000.
• If an employee's chosen individual plan premium is below $500, the employer reimburses the actual premium up to the cap.
• If the premium exceeds $500, the employee pays the difference, subject to the plan document and payroll rules.

Actual individual-market premiums vary by state, rating area, age, tobacco use, plan metal level, and household income (which affects any premium tax credit the employee would otherwise be eligible for). Pull live quotes for each employee's ZIP code and age before setting a contribution. Do not budget off a national average.

How should an employer explain an ICHRA to employees?

If you decide to move forward, you will need to tell your team. Here is a plain-English announcement you can adapt. It is not the formal notice required by federal rules; a qualified administrator or benefits adviser should provide that notice.

Subject: New health benefit for 2027: CHOICE Arrangement

Team,

Starting January 1, 2027, [Company Name] will offer a CHOICE
Arrangement (also called an ICHRA) instead of a traditional group
health plan.

How it works:
- The company will contribute $[amount] per employee per month
  toward the cost of an individual health insurance plan you choose.
- You pick your own plan on healthcare.gov (or your state's
  marketplace).
- Eligible expenses, reimbursement procedures, enrollment
  deadlines, and any employee-paid premium amounts depend on the
  plan document, marketplace, and applicable tax rules. Formal
  materials will explain the terms.

[TPA Name] will send you the required federal notice and walk you
through plan selection in [month].

Questions: reply to this email or ask [HR contact].

[Owner name]

Tip: paste this template into ChatGPT or Claude with a prompt like "Turn this into a fillable Word document with placeholders for company name, contribution amount, TPA name, and effective date, and generate a matching one-page PDF summary for employees." You'll get a working file you can edit and send.

What did the CHOICE announcement leave unchanged?

• It does not lower the cost of individual-market premiums.
• It does not create the $100-per-employee-per-month tax credit; that requires the Biggs bill to pass Congress.
• It does not change ACA rules for employers with 50 or more full-time-equivalent employees, who remain subject to the employer mandate.
• It does not let employees use pre-tax ICHRA dollars for a short-term health plan or health-sharing ministry.

Should a small business consider a CHOICE Arrangement?

CHOICE Arrangements are the same ICHRA rule that has been on the books since 2019, with a new name, new CMS guidance, and a proposed tax credit that is not yet law. For a small employer that has never been able to afford a group plan, the arrangement is a real option worth pricing out this fall. For an employer already offering a group plan that employees like, the case is thinner. The announcement indicates that CMS and SBA plan to promote the arrangement more actively, so employers may see more information from agencies, brokers, and benefits administrators.

Novo does not sell health insurance and this article is not legal, tax, or accounting advice. Talk to a licensed benefits broker or CPA before adopting any health plan for your business.

Disclosures

Novo Platform Inc. ("Novo") strives to provide accurate information but cannot guarantee that this content is correct, complete, or up-to-date. This page is for informational purposes only and is not financial or legal advice nor an endorsement of any third-party products or services. All products and services are presented without warranty. Novo Platform Inc. does not provide any financial or legal advice, and you should consult your own financial, legal, or tax advisors.