CHOICE Act
Sponsored By: Senator Tim Sheehy
Introduced
Summary
CHOICE arrangement would create a new employer-funded health reimbursement arrangement that coordinates with individual-market insurance and Medicare. It would set who can get the benefit, require employers to verify coverage and claims, and add a new W-2 reporting line.
Show full summary
- Workers and families: Employers could reimburse medical care up to a fixed dollar cap only while the worker is enrolled in individual coverage or Medicare, and reimbursements would cover expenses only during the period of that coverage. This takes effect for plan years beginning after December 31, 2025.
- Employers: Must offer CHOICE to all employees in defined classes on the same terms, follow substantiation procedures for enrollment and claims, and provide a written notice at least 60 days before the plan year. Employers may increase maximum reimbursements for additional dependents or by age but not above 300% of the lowest maximum.
- Market and regulators: CHOICE arrangements would be treated as meeting certain Public Health Service Act market and coverage requirements and regulators must adjust current HRA rules and reporting to align with the new option.
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Bill Overview
Analyzed Economic Effects
2 provisions identified: 2 benefits, 0 costs, 0 mixed.
Tax credit for CHOICE employers
If enacted, eligible employers (not applicable large employers) could claim a two-year tax credit for creating a CHOICE arrangement beginning in taxable years after December 31, 2025. In the first year the credit would be $100 per enrolled employee for each month the employee is enrolled (up to $1,200 per employee). In the second year the credit would be half that monthly amount (for example, $50 per month, up to $600 per employee). Dollar amounts would be adjusted for inflation for years after 2026. The credit would be part of the general business credit and allowable against the alternative minimum tax as provided.
New employer-funded HRA for individuals
If enacted, employers could offer a new employer-funded health reimbursement arrangement (a CHOICE arrangement) starting for plan years after December 31, 2025. The employer would pay or reimburse medical care only while you (and any dependents) are enrolled in eligible individual market coverage (not just excepted benefits) or Medicare Part A/B or Part C. The arrangement must meet notice rules (usually a written notice at least 60 days before the plan year), verification of enrollment and claims, and nondiscrimination rules. Employers must report the total permitted benefit amount for each enrolled employee on the employee's Form W-2 (new item 20). Employers would fund the arrangement solely by employer contributions and set a fixed maximum dollar amount; permitted increases for dependents or age could not exceed 300 percent of the base amount.
Sponsors & CoSponsors
Sponsor
Tim Sheehy
MT • R
Cosponsors
Marsha Blackburn
TN • R
Sponsored 11/18/2025
Jim Banks
IN • R
Sponsored 11/19/2025
Roger Marshall
KS • R
Sponsored 11/20/2025
Roll Call Votes
No roll call votes available for this bill.
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