Not everything Congress discussed this summer made it across the finish line. While the recently signed “One Big Beautiful Bill Act” delivers some headline-worthy wins for HSAs and dependent care (see Stars, Stripes & Savings), a handful of anticipated updates – especially those tied to Individual Coverage Health Reimbursement Arrangements (ICHRAs) – were dropped from the final package.
Here’s a quick look at what didn’t make the cut.
- No Codification or Rebranding of ICHRAs Early drafts of the bill proposed formally codifying ICHRAs into the tax code and rebranding them as Custom Health Option and Individual Care Expense (CHOICE) Arrangements. This move would have given ICHRAs greater long-term stability while updating some key administrative rules – such as shortening the notice period from 90 to 60 days.
- No Pre-Tax Exchange Coverage Another discarded provision would have allowed employees to pay for ACA marketplace coverage pre-tax through a cafeteria plan when offered alongside a CHOICE Arrangement. This would’ve resolved a long-standing disconnect between tax policy and how current ICHRAs function in the real world.
- No Employer Tax Credit Finally, the bill scrapped a proposed two-year tax credit for small employers who implement CHOICE Arrangements for the first time. The credit would’ve provided $100 per enrolled employee per month in year one, and $50 per month in year two – an incentive aimed at encouraging broader adoption among small businesses.
So, What’s Next?
For now, ICHRAs remain a regulatory creation, not a statutory one…meaning their future is still tied to administrative rulemaking rather than permanent law. And while these provisions didn’t survive the final legislative process, they’re far from forgotten. Policymakers are clearly thinking about how to modernize HRAs and increase access to flexible coverage models.
Want to Learn More? Join Us July 24!
The ICHRA market continues to grow, and so does the conversation. Diversified is co-hosting a special in-person ICHRA event with our partners at IHC Specialty Benefits on Thursday, July 24 at Wisconsin Brewing Company Park, home of the Lake Country DockHounds.
I’ll be on stage breaking down the 2025 tax bill: what made it in, what got left out, and what it all means. If you’re a broker or benefits advisor looking to stay ahead of the curve, you won’t want to miss it.
We hope to see you there!
Event Registration: https://www.surveymonkey.com/r/KNKWV2M
About the Author
Jason Westphal (Government Relations)
With over two decades of experience as a government relations professional and political consultant, Jason brings a wealth of knowledge to the employee benefits, financial services, and taxation space. As Diversified’s eyes and ears at both the federal and state level, Jason is responsible for monitoring legislative and regulatory activity, providing detailed analysis and recommendations to internal and external stakeholders and managing relationships with key government officials.