Same benefit, new branding. Here’s what the federal rebrand means (and doesn’t mean) for employers and brokers.
On September 3, 2026, the Centers for Medicare & Medicaid Services (CMS) and the U.S. Small Business Administration (SBA) announced a new name for Individual Coverage Health Reimbursement Arrangements (ICHRAs): CHOICE Arrangement…short for Custom Health Option and Individual Care Expense Arrangements.
For Diversified clients and broker partners, the bottom line is simple: new name, same benefit.
How the CHOICE Arrangement works
- The employer sets a budget: The company chooses a fixed, tax-free monthly allowance, which can vary by employee class (i.e. full-time vs part-time).
- The employee shops for a plan: Employees buy individual health insurance on or off the Marketplace, choosing coverage that best fits their/their family’s needs.
- Reimbursement is tax-free: The allowance reimburses premiums and, depending on plan design, other eligible medical expenses.
- The coverage is portable: The employee owns the policy and can keep it after leaving their job (but the employer’s funding stops).
Did anything change from the old ICHRA rules?
No. The rebrand does not change how the benefit works. Eligibility rules, employee classes, minimum class sizes, affordability and notice requirements are all the same as before.
If your organization already offers an ICHRA, you don’t need to do anything. Existing plan documents, payroll setups and employee communications remain valid. “ICHRA” is still the term used in the governing regulations, so expect to see both names used interchangeably for some time.
Did Congress pass legislation?
No. The CHOICE Arrangement exists through executive action and agency rulemaking, not an act of Congress.
- 2017: President Trump signed an executive order that led to the creation of the new benefit.
- 2019-2020: The Departments of Labor, Treasury and HHS finalized the ICHRA rules, which took effect in 2020.
- 2025: Congress tried several times to codify ICHRA under the CHOICE name, including H.R. 3799 and provisions in the House version of the One Big Beautiful Bill. The CHOICE provisions were stripped from the final law, and a later House-passed package stalled in December 2025.
- September 2026: Because previous legislation stalled, CMS and SBA adopted the name administratively. Legal scholars have described it as a branding and outreach effort, not a new regulatory framework.
The statutory enhancements Congress debated, such as a federal small-employer tax credit, are not law.
What it means for employers and brokers
Federal backing and a friendlier name are designed to drive small-business adoption. More interest means more employers who want defined-contribution predictability but lack the in-house infrastructure to run it.
That’s where a TPA partner like Diversified comes into play. The tax advantages of a CHOICE Arrangement depend on compliance-focused administration. That includes including confirming participants are enrolled in qualifying individual or Medicare coverage, reviewing premium statements and receipts before tax-free funds are paid, and making sure allowance differences follow IRS/ACA class and nondiscrimination requirements.
Whether you call it an ICHRA or a CHOICE Arrangement, Diversified administers it…and nothing about your plan or our service driven approach changes with the new name. So, if you’re an employer weighing a move to a defined contribution, or a broker fielding client questions about the rebrand, contact our Sales Team @ (800) 234-1229 to talk through plan design options.