The CHOICE Act allows employers to offer "custom health option and individual care expense arrangements," which are tax-advantaged health reimbursement accounts that reimburse employees for individual health insurance coverage they purchase on their own rather than through a group plan. Employers can offer these accounts to specified classes of employees (such as full-time workers, part-time workers, or employees in certain geographic areas) as long as they offer them on equal terms within each class and don't simultaneously offer other group health plans to those same employees. The arrangement applies to plan years beginning after December 31, 2025, and includes requirements that employers verify employees maintain individual health insurance coverage and provide notice of the arrangement's terms. The legislation also provides employers with a tax credit of $100 per employee per month for the first year and $50 per employee per month for the second year of offering such arrangements, with the credit limited to employers with fewer than 50 full-time employees, and allows employees participating in these accounts to purchase insurance through healthcare exchanges using pre-tax dollars under cafeteria plans.
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