2019
The final ICHRA rule
The federal final rule was published June 20, 2019, allowing individual-coverage HRAs for plan years beginning on or after January 1, 2020.
The complete employer and employee resource
Learn About CHOICE Plans.
Understand CHOICE Arrangements - formerly ICHRA - including employer allowances, family affordability, plan shopping, compliance and enrollment.
CHOICE Arrangement and ICHRA: the short answer
CHOICE stands for Custom Health Option and Individual Care Expense. The central model remains familiar: an employer establishes a defined contribution, and eligible employees use it toward qualifying individual health coverage or Medicare under applicable rules.
Important: CMS publicly announced the CHOICE Arrangements name on September 3, 2026. That announcement should not be described as changing the underlying law by itself. Employers should continue following controlling statutes, regulations and formal agency guidance.
History
From ICHRA to CHOICE Arrangements
2020
ICHRA begins
ICHRA became available January 1, 2020. The ICHRA Shop began helping employers evaluate and implement the model in February 2020.
2026
CHOICE is announced
On September 3, 2026, CMS announced the CHOICE Arrangements name, giving the established ICHRA model a clearer public identity.
How a CHOICE Arrangement works
The employer chooses the contribution strategy. Employees choose qualifying individual coverage available in their market. The arrangement may reimburse eligible premiums and, depending on plan design, other qualified medical expenses.
Employer responsibilities
- Set the defined contribution budget.
- Define eligible classes and geography.
- Review affordability and family impact.
- Adopt plan documents and deliver notices.
- Provide a clear enrollment and payment process.
Three-step launch
1. Configure
Set employee, spouse and dependent contributions, classes and geography.
Set employee, spouse and dependent contributions, classes and geography.
2. Adopt
Approve the design, documents, notice and administrative process.
Approve the design, documents, notice and administrative process.
3. Enroll
Share the employee link for shopping, enrollment, payment instructions and live support.
Share the employee link for shopping, enrollment, payment instructions and live support.
Family affordability
Do not stop with employee-only coverage.
Individual-market family premiums reflect actual people: the employee, spouse, dependent children, ages and location. A thoughtful contribution strategy separately models employee, spouse and dependent allowances before evaluating family affordability and possible Marketplace implications.
Employee
Test employee-only affordability by age, location and required contribution.
Spouse
Evaluate spouse premium, household circumstances and access to other coverage.
Dependents
Account for the number and ages of children and the family's actual individual-market premium.
Why employers consider CHOICE
Predictable funding
The employer defines how much it will contribute instead of simply absorbing another group renewal.
Local plan choice
Employees select among qualifying plans available in their market, with premiums and networks that vary by geography.
Workforce flexibility
Permitted employee classes and geographic strategies may support remote, distributed and multi-state workforces.
A CHOICE Arrangement is not automatically less expensive. A credible analysis compares current group coverage, renewal, individual-market prices, networks, employee costs and family outcomes.
Frequently asked questions
Is a CHOICE Arrangement the same as ICHRA?
CHOICE Arrangement is the new public name announced for the benefit long known as ICHRA. Existing ICHRA rules and formal guidance remain essential.
When did ICHRA start?
ICHRA became available for plan years beginning on or after January 1, 2020, following the 2019 final federal rule.
Can a large employer offer CHOICE?
Yes. Employers of many sizes can use the model, but applicable large employers must address affordability, employer-mandate and reporting requirements.
Can contributions vary by family size and age?
Permitted family-size and age variations can be used, subject to the rules. The oldest participant's age-based amount may not exceed three times the youngest participant's amount within the applicable design.
Does CHOICE always save money?
No. Results depend on employee ages, geography, family composition, plan availability, networks, current group costs and contribution design.
Free CHOICE planning resource
Read or download the complete guide.
The updated 17-page resource covers history, contribution design, family affordability, classes, geography, HSA considerations, employee enrollment, brokers, vendor questions and implementation.
Talk through your situation
Bring your census, current plan design, employer contributions and renewal. We will compare the options before recommending a platform.
Book a strategy meetingSources
2019 HRA final rule · Department of Labor final-rule announcement · DOL model ICHRA notice · 2022 family-affordability final rule
The ICHRA Shop's February 2020 start date is a company-history statement supplied by The ICHRA Shop. This page is educational and is not legal, tax or accounting advice.