Understanding the New CHOICE Arrangement Name

What the updated name means for employers and brokers.

The Individual Coverage Health Reimbursement Arrangement, commonly known as ICHRA, has a new federal name: the CHOICE Arrangement.

CHOICE stands for Custom Health Option and Individual Care Expense Arrangement.

While the name has changed, the benefit itself continues to work the same way.

How a CHOICE Arrangement Works

A CHOICE Arrangement is an employer-funded health reimbursement arrangement. Instead of offering one traditional group health plan, an employer establishes an allowance that eligible employees can use toward individual health insurance coverage.

Depending on the plan design, funds may also be available for other eligible medical expenses.

Each employee can choose individual coverage that works for their personal circumstances rather than being limited to one employer-selected group plan.

What Employers Need to Know

Employers currently offering an ICHRA do not need to create a new benefits program because of the updated name. Existing plan rules, contribution structures, eligibility requirements, and administrative responsibilities continue to apply.

Employers should begin updating benefits materials and employee communications to reflect the new terminology. During this transition, using CHOICE Arrangement, formerly known as ICHRA can help employees and other stakeholders understand that both names refer to the same benefit.

Why the New Name Is Helpful

The term ICHRA has not always been easy for employers or employees to understand. The CHOICE Arrangement name places greater emphasis on one of the model’s primary advantages: employees can select individual health insurance coverage that reflects their personal needs.

For employers, a CHOICE Arrangement can offer greater control over benefits spending and additional flexibility when supporting different employee populations, including workforces located across multiple geographic areas.

Another Option for Benefits Planning

Traditional group health plans remain an important solution for many organizations. A CHOICE Arrangement is not meant to suggest that every employer should move away from group coverage.

Instead, it provides another option for employers whose workforce needs, financial goals, or organizational structure may be better served by an individual coverage strategy.

Brokers play an essential role in helping employers understand their options and determine which approach is right for their organization.

Moving Forward with OCA

As the benefits industry adopts the new terminology, OCA will use CHOICE Arrangement, formerly known as ICHRA, when additional context is helpful.

OCA provides brokers and employers with the technology, administrative support, and benefits expertise needed to implement and manage a CHOICE Arrangement with confidence.