The federal government has given ICHRA a new name.

On September 3, 2026, the U.S. Small Business Administration and the Centers for Medicare & Medicaid Services announced that Individual Coverage Health Reimbursement Arrangements, better known as ICHRAs, will now be promoted as CHOICE Arrangements.

At first glance, this may look like little more than a branding exercise. In one sense, it is. The underlying benefit arrangement did not suddenly become something new.

But I think the announcement is more important than the name itself.

The federal government is no longer merely permitting employers to use ICHRA. It is now actively presenting the arrangement to small businesses as an alternative to traditional group health insurance. The SBA and CMS have also created new employer resources, including a cost estimator and information about third-party administrators.

That is a meaningful shift in visibility.

What Is a CHOICE Arrangement?

A CHOICE Arrangement is the benefit structure we have known as ICHRA since it became available in 2020.

Instead of selecting one group health plan for everyone, the employer establishes a defined amount of money to reimburse eligible employees for qualifying individual health insurance premiums and, depending on the plan design, certain other medical expenses.

The employee selects an individual policy based on considerations such as:

Premium
Deductible and out-of-pocket exposure
Prescription coverage
Physician and hospital networks
The needs of covered family members

When federal requirements are satisfied, employer reimbursements are generally tax-deductible to the business and tax-free to the employee.

Employers of any size can establish the arrangement as long as they have at least one eligible W-2 employee. That can make it relevant to very small employers that may not be able to establish a practical traditional group plan.

What Actually Changed?

The clearest change is the name.

ICHRA has never been an especially inviting acronym. It is difficult to say, easy to confuse with other HRAs and almost meaningless to an employer hearing it for the first time.

“CHOICE Arrangement” puts the employee-choice idea directly in the name.

Federal agencies are also giving the arrangement a more prominent small-business presentation. The SBA’s new CHOICE Arrangement page speaks to two specific audiences:

Small employers that want to offer health benefits for the first time
Employers considering leaving a traditional group health plan

The new CMS employer guide goes further. It explains contribution strategies, employee classes, eligible coverage, administration and the interaction between the employer contribution and the employee’s individual policy.

CMS has also published a directory of third-party administrators that can help employers establish and administer the arrangement.

The rules are not new. The public push is.

What Did Not Change?

A new name does not remove the tradeoffs.

Employees still need qualifying individual health insurance or Medicare, where permitted, to receive reimbursements. Employers still need a formal plan structure, required notices, substantiation and administration. Federal employee-class rules still matter. So do affordability rules and the interaction between an employer’s offer and an employee’s eligibility for a Marketplace premium tax credit.

The employee has more choice, but only among the individual plans available where the employee lives.

That distinction is especially important in Ohio. Carrier participation, provider networks, premiums and plan designs can vary materially from one county to another. An arrangement that works well for employees in Cincinnati may produce a different result for employees living in a rural county.

Nor does a CHOICE Arrangement make healthcare inflation disappear.

The employer controls its contribution more directly, which can make the employer’s budget more predictable. But if individual-market premiums increase and the employer does not increase its contribution, employees absorb more of the increase.

Predictable employer cost and affordable employee coverage are related, but they are not the same thing.

Does CHOICE Always Cost Less Than Group Health Insurance?

No.

The SBA announcement describes CHOICE Arrangements as a way for small employers to obtain health benefits at a fraction of the cost of traditional group insurance. That may be true in some cases, particularly for employers that are not offering coverage today or that face a very difficult group renewal.

I would not treat it as a universal promise.

The only responsible way to evaluate the difference is to compare the employer’s current or proposed group plan against the individual-market options available to the actual employees involved.

That comparison should include more than the employer’s total contribution. It should also consider:

What employees will pay after the employer reimbursement
Provider and prescription networks
Deductibles and maximum out-of-pocket exposure
Employee ages and home counties
The effect on Marketplace premium tax credits
The employee enrollment and service experience
Future contribution strategy

Sometimes the result will favor the CHOICE Arrangement. Sometimes a traditional group plan will remain the better fit.

Why the Federal Push Matters

ICHRA was created through federal rules issued during President Trump’s first administration and became available in 2020. The second Trump administration is now putting the SBA and CMS behind a coordinated effort to explain and expand its use.

To me, this is another sign that the model is becoming institutionally persistent.

The more employers use it, the more administrators build around it. The more administrators support it, the easier it becomes for brokers and employers to implement. Broader adoption may also give insurance carriers a stronger reason to compete for individual-market members and develop better products.

That does not guarantee ICHRA, or CHOICE, will become the dominant form of employer health insurance. It does mean the arrangement is moving farther from the edge of the market.

I recently described ICHRA as a bridge between the tax advantages of employer funding and the individual insurance market. The bridge now has a much larger federal road sign.

What Should an Ohio Small Employer Do?

The name change alone is not a reason to replace a group health plan.

It is a reason to understand the option.

For an employer considering benefits for the first time, a CHOICE Arrangement may create a workable path without requiring the company to choose one group plan for everyone.

For an employer facing another difficult group renewal, it may be worth comparing the renewal against the individual-market choices available to employees.

For now, employers will continue to see both terms. Federal agencies are using CHOICE Arrangements, while many carriers, administrators, brokers and existing documents still use ICHRA. They refer to the same underlying arrangement.

The name has changed. The real decision has not.

The question is still whether the arrangement works for the employer’s budget and for the employees who will depend on it.

About the Author

For more than three decades, Ted Stevenot has helped Ohio small businesses and their owners evaluate health insurance and employee benefits as a partner at McCarthy Stevenot Agency, Inc.

He writes the Broker’s Desk series to document the real-world decisions, conversations and observations that come from helping small businesses navigate health insurance.

Talk With McCarthy Stevenot Agency

If your Ohio business is considering an ICHRA, now called a CHOICE Arrangement, the employer contribution is only part of the decision.

Employers also need to consider the individual plans available to employees, provider networks, affordability rules, administration and how the arrangement compares with available group options.

Contact McCarthy Stevenot Agency to discuss whether a CHOICE Arrangement or traditional group health plan makes sense for your business, or call 513-891-9888.

Disclaimer

Broker’s Desk is a series of observations from more than three decades of helping Ohio small businesses and their owners navigate health insurance. Some articles explain a process. Others examine the tradeoffs behind real employer decisions. Client-identifying details may be omitted or generalized to protect privacy.

CHOICE Arrangement and ICHRA rules, individual-market premiums, plan availability, provider networks, contribution strategies and affordability calculations vary by employer, employee circumstances and location. Federal requirements may also change over time. This article is intended to explain practical considerations involved in evaluating an arrangement and is not legal or tax advice. Employers should review their specific circumstances with appropriate insurance, tax or legal professionals.