Choice Arrangement
Sponsored By: Representative Hern (OK)
Introduced
Summary
Would create a new employer-funded CHOICE arrangement that coordinates reimbursements with individual-market or Medicare coverage. It would also establish a targeted employer tax credit for the first two years and add W-2 reporting plus verification and notice rules.
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- Employees and families: Workers could receive employer payments or reimbursements for medical care only while they have individual market or Medicare coverage. Being in a CHOICE arrangement would not stop an employee from buying exchange coverage through a cafeteria plan.
- Employers: Employers may offer CHOICE arrangements to defined classes of employees under nondiscrimination, substantiation, and notice rules. Eligible employers that are not large employers could get a credit equal to $100 per enrolled employee per month in year one and $50 per month in year two for the first two years.
- Administration and reporting: The total permitted CHOICE benefits must be reported on employees’ W-2s and federal agencies would adjust rules to implement the changes. The provisions would apply to plan years and taxable years beginning after December 31, 2025.
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Bill Overview
Analyzed Economic Effects
5 provisions identified: 2 benefits, 0 costs, 3 mixed.
Small-business tax credit for CHOICE
Small employers that are not applicable large employers could get a new tax credit for offering CHOICE. It would pay $100 per enrolled employee per month in year one, and $50 per month in year two. The credit would run for the first two one‑year periods after the employer starts CHOICE, and amounts would be indexed after 2026. It would be part of the general business credit and allowed against the AMT. This would apply to tax years beginning after December 31, 2025.
New employer health account for individual plans
This bill would let employers offer a new CHOICE health account. The employer would fund it and set a dollar limit. It would only pay for care while you have individual health insurance (not excepted benefits) or Medicare Parts A and B, or Part C. Plans would start for plan years beginning after December 31, 2025.
Employer rules for offering CHOICE plans
Employers would need to offer CHOICE on the same terms to everyone in a chosen employee class, like full-time, part-time, seasonal, or union groups. They generally could not also offer another group health plan to that class, with limited small‑group exceptions. Employers could vary maximum benefits for added dependents and by age, but not above 300% of the lowest amount. Employers would have to give clear written notice at least 60 days before the plan year (with timing relief for new hires and new employers). Plans would need to verify workers’ qualifying coverage at the start and keep checking that reimbursements match ongoing enrollment. These rules would apply for plan years beginning after December 31, 2025.
Cafeteria option and W-2 reporting for CHOICE
If you are in a CHOICE plan, you would still be able to use your employer’s cafeteria plan to buy individual market insurance. Employers would also need to show the total CHOICE benefits on your Form W‑2. These changes would apply for plan years beginning after December 31, 2025.
Agencies would update HRA rules
Treasury, HHS, and Labor would update 2019 HRA rules to fit the new CHOICE framework. References to custom health options would be treated as including individual coverage HRAs. This is a regulatory update, not a direct payment.
Sponsors & CoSponsors
Sponsor
Hern (OK)
OK • R
Cosponsors
Van Duyne
TX • R
Sponsored 9/18/2025
Tenney
NY • R
Sponsored 9/18/2025
Malliotakis
NY • R
Sponsored 10/8/2025
Steube
FL • R
Sponsored 10/21/2025
Miller (OH)
OH • R
Sponsored 10/21/2025
Yakym
IN • R
Sponsored 11/17/2025
Fitzgerald
WI • R
Sponsored 11/17/2025
Moran
TX • R
Sponsored 11/20/2025
Van Orden
WI • R
Sponsored 3/5/2026
Roll Call Votes
No roll call votes available for this bill.
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