On September 3, 2026, the Centers for Medicare and Medicaid Services and the U.S. Small Business Administration jointly announced the administrative rebranding of the Individual Coverage Health Reimbursement Arrangement, or ICHRA, as the CHOICE Arrangement. If you have been evaluating ICHRA as a small business health insurance option, or already offer it to your employees, the core answer is straightforward: same benefit, new name. The mechanics, rules, and requirements that govern how the health reimbursement arrangement works did not change.
What did change is how the federal government is positioning and promoting it, and why that matters for small business owners who want to offer employee health benefits without the cost unpredictability of a traditional group health plan. The rebrand also arrives alongside a pending legislative push that, if the Senate acts, would formally codify the benefit in federal statute and add new financial incentives for small employers.
This guide explains what happened on September 3, what changed and what did not, where the pending legislation stands as of October 2026, and what all of it means for small businesses considering their employee benefits options.
Key Facts: ICHRA, CHOICE Arrangements, and What Changed in September 2026
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On September 3, 2026, CMS and the SBA announced the administrative rebranding of ICHRA as CHOICE Arrangements.
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The underlying ICHRA rules and regulations remain unchanged; the rebrand is a federal awareness and outreach effort, not new legislation or regulation
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Employers currently offering an ICHRA do not need to change plan documents, payroll setups, or employee communications as a result of the name change.
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ICHRA grew at approximately 50% between 2025 and 2026, according to the HRA Council.
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H.R. 6703 (Lower Health Care Premiums for All Americans Act) passed the House 216-211 on December 17, 2025, and has been awaiting Senate action since December 18, 2025.
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If enacted, H.R. 6703 would codify CHOICE Arrangements into federal statute, allow pre-tax ACA Marketplace premiums through cafeteria plans, and create a two-year small employer tax credit.
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The SBA launched a dedicated CHOICE Arrangements resource page at sba.gov, last updated September 2, 2026.
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Any employer with at least one W-2 employee can offer a CHOICE Arrangement, with no minimum group size and no participation threshold.
What Is a CHOICE Arrangement?
A CHOICE Arrangement, formerly called an ICHRA, is an employer-funded health reimbursement arrangement that reimburses employees for individual health insurance premiums and certain qualified medical expenses. Instead of purchasing a group health plan on behalf of employees, the employer sets a fixed monthly reimbursement allowance. Employees use that allowance to purchase their own individual health coverage through HealthCare.gov, a state marketplace, or directly from a carrier.
Employer reimbursements are generally tax-deductible for the business and tax-free to employees. There is no federal cap on the monthly contribution amount, no minimum participation requirement, and no minimum employer size. Any employer with at least one W-2 employee can offer a CHOICE Arrangement.
How Is a CHOICE Arrangement Different From a Group Health Plan?
This is the question most small business owners ask first. The structural difference comes down to who selects the coverage and what the employer’s cost exposure looks like.
With a traditional group health plan, the employer selects a plan or set of plans from a carrier, negotiates contribution levels, and manages the annual renewal cycle. The employer bears open-ended cost exposure: if the group’s claims run high or the carrier raises rates at renewal, the employer absorbs that change. Employees receive the plan the employer chose, regardless of whether it fits their household needs.
With a CHOICE Arrangement, the employer sets a fixed monthly allowance and employees choose their own individual health coverage from the available options in their market. The employer’s cost is capped at the allowance amount, which does not change with the group’s health utilization or carrier renewal decisions. Employees select coverage that matches their household, their doctors, and their prescriptions.
Neither model is universally better. Group health plans provide more uniformity and a familiar employee experience. CHOICE Arrangements provide more budget predictability and more employee flexibility. For small businesses in Florida and South Carolina facing consecutive years of double-digit group premium increases, the case for evaluating CHOICE Arrangements is stronger today than it has been at any point since the benefit launched in 2020.
Why Did the Federal Government Rebrand ICHRA as CHOICE Arrangements?
The rebrand reflects a deliberate effort to increase awareness and adoption of a small business health insurance option that has grown rapidly but remains underutilized relative to its potential. According to the HRA Council, ICHRA grew approximately 50% between 2025 and 2026, but still covers a relatively small share of the employer market.
The CHOICE Arrangements name and the accompanying national awareness campaign are designed to make the health reimbursement arrangement more visible and accessible to small business owners who may not have known it existed. The SBA launched a dedicated resource page, CMS updated its materials to reflect the new name, and federal officials held a press event in Indiana to formally introduce the rebrand.
According to TASC, for CHOICE Arrangement to officially replace ICHRA as the governing legal name, it must complete a multi-agency rulemaking process across HHS, DOL, and the Treasury, be enacted by Congress, or be established via an Executive Order. The September 3 announcement was an administrative branding and outreach action. The current rules governing how the benefit operates were established by federal rulemaking in 2019 and remain in effect.
What Stayed the Same After the September 3 Rebrand?
The following elements did not change and are still governed by the existing 2019 regulatory framework.
How the benefit works. Employers set a monthly allowance. Employees use it to purchase qualifying individual health coverage. Employers reimburse employees for premiums and qualifying expenses up to the allowance amount.
Eligibility rules. Employees must be enrolled in qualifying individual health coverage or Medicare, where applicable, to receive reimbursements.
The 90-day advance notice requirement. Employers are still required to provide employees with written notice at least 90 days before the start of each plan year explaining the benefit terms and how it interacts with ACA marketplace subsidy eligibility.
The 2026 ACA affordability threshold. For Applicable Large Employers subject to the ACA employer mandate, the affordability standard remains 9.96% of household income, per IRS Rev. Proc. 2025-25.
The ACA marketplace subsidy interaction. Employees who accept a CHOICE Arrangement benefit are not eligible for ACA premium tax credits during the months they participate, regardless of income. This rule remains in place.
Existing plan documents. Employers currently offering an ICHRA do not need to rename, revise, or reissue any plan documents. Existing documentation, payroll setups, and employee notices remain valid.
Will Congress Codify CHOICE Arrangements? What Does H.R. 6703 Mean for Small Businesses?
The September 3 rebrand is entirely separate from ongoing congressional efforts to formally place CHOICE Arrangements into federal statute. Those efforts are still pending Senate action.
H.R. 6703, the Lower Health Care Premiums for All Americans Act, passed the House 216-211 on December 17, 2025, and was referred to the Senate the following day. As of September 24, 2026, the Senate has not voted on the bill.
If enacted, H.R. 6703 would make meaningful additions to what the current regulatory framework already allows.
Statutory codification. ICHRA was created through executive rulemaking in 2019, not by Congress. The bill would place CHOICE Arrangements into federal statute, giving the benefit a legal foundation that does not depend on regulatory guidance that can change between administrations.
Pre-tax ACA Marketplace premiums. The bill would allow employees to purchase on-exchange individual coverage using pre-tax payroll deductions through Section 125 cafeteria plans. Current rules do not allow this. The change would increase employees’ net take-home pay and reduce employer payroll tax liability.
Small employer tax credit. The bill would create a two-year tax credit for employers with fewer than 50 employees: $100 per employee per month in the first year and $50 per employee per month in the second year. Employees must maintain minimum essential coverage to qualify.
Shorter notice requirement. The bill would reduce the employee advance notice window from 90 to 60 days before the start of the plan year.
None of these provisions are currently law. The Senate has not scheduled a vote, and the bill faces the same environment that led the Senate to strip similar provisions from the One Big Beautiful Bill Act in July 2025. Small business owners should plan under the current regulatory framework. If the Senate acts, the changes would be significant.
What Does the CHOICE Arrangements Rebrand Mean for Small Business Owners Considering Employee Benefits?
The rebrand and national awareness campaign are useful to small business owners primarily because the federal government is now investing in making the health reimbursement arrangement easier to find and understand. The SBA resource page, the CMS materials, and the updated terminology all reflect that intent.
What the rebrand does not change is the underlying case for offering CHOICE Arrangements, which existed well before September 3.
For businesses facing rising group premiums. CHOICE Arrangements fix the employer’s cost exposure at the monthly allowance amount. A group renewal that would have raised your premiums does not affect your CHOICE Arrangement contribution unless you choose to change it.
For businesses with geographically distributed workforces. Florida and South Carolina employers with employees in multiple counties or markets can offer a single CHOICE Arrangement structure while each employee selects individual health coverage appropriate to their local market.
For businesses offering employee benefits for the first time. CHOICE Arrangements have no minimum group size, no carrier underwriting process, and no participation threshold. They offer a faster and more budget-predictable path into employee health benefits than a traditional group plan.
For businesses with mixed full-time and part-time workforces. Employers can set different allowance amounts for different classes of employees, such as full-time versus part-time workers or salaried versus hourly staff, within federal rules.
One Florida-specific consideration applies regardless of the rebrand: Florida has not expanded Medicaid. Lower-income employees who fall below the ACA subsidy threshold may be unable to effectively use a CHOICE Arrangement allowance if they cannot access subsidized marketplace coverage. Employers with lower-wage Florida workforces should evaluate this with a licensed advisor before implementing.
How Can a Licensed Advisor Help Small Business Owners Evaluate CHOICE Arrangements?
CHOICE Arrangements offer real cost-control benefits for the right employer. They also carry compliance requirements, including affordability calculations, advance notice obligations, and the ACA subsidy interaction, that are easy to mishandle without professional guidance.
A licensed YourMedPlan advisor who works with small business health insurance options can compare CHOICE Arrangements against your current group plan, model what a defined contribution structure would cost for your specific workforce, and identify the approach that fits your employees and your budget. If the Senate eventually acts on H.R. 6703, a YourMedPlan advisor can also help you understand what changes and whether any adjustments to your benefit structure make sense.
YourMedPlan is a licensed health insurance agency headquartered in Florida and serving employers across 43 states. There is no consultation fee.
Reach out to YourMedPlan today for a no-cost review of your small business employee benefits options.
Frequently Asked Questions: CHOICE Arrangements for Small Business Owners
What is a CHOICE Arrangement? A CHOICE Arrangement, formerly called an ICHRA, is an employer-funded health reimbursement arrangement that reimburses employees for individual health insurance premiums and qualifying medical expenses. The employer sets a fixed monthly allowance. Employees purchase their own individual health coverage and are reimbursed up to that amount. Employer contributions are generally tax-deductible. Employee reimbursements are generally tax-free.
When did ICHRA become CHOICE Arrangements? CMS and the SBA announced the rebrand on September 3, 2026, at an event in Indiana. The SBA updated its resource page to reflect the new name on September 2, 2026. The change is an administrative rebranding, not new legislation or regulation.
How is a CHOICE Arrangement different from a group health plan? With a group health plan, the employer selects coverage and bears open-ended renewal cost exposure. With a CHOICE Arrangement, the employer sets a fixed monthly reimbursement allowance and employees select their own individual health coverage. The employer’s cost is capped at the allowance amount regardless of how premiums move in the broader market. Group plans provide consistency. CHOICE Arrangements provide cost predictability and employee flexibility.
Do I need to change my ICHRA plan documents because of the name change? No. Existing ICHRA plan documents, payroll setups, and employee notices remain valid and do not need to be revised as a result of the September 3 rebrand. Employers can continue operating their existing plans without taking any immediate action.
What is the CHOICE Arrangement tax credit for small businesses? The small employer tax credit is a provision of H.R. 6703, which passed the House on December 17, 2025 and is pending Senate action as of September 24, 2026. If enacted, the credit would provide $100 per employee per month in the first year and $50 per employee per month in the second year for employers with fewer than 50 employees who offer CHOICE Arrangements to employees with minimum essential coverage. This provision is not currently law.
Is CHOICE Arrangements now a federal law? No. CHOICE Arrangements operate under federal regulations established in 2019, not federal statute. H.R. 6703, which would codify CHOICE Arrangements into law and add enhancements including the small employer tax credit and pre-tax Marketplace premiums, passed the House on December 17, 2025, and has been awaiting Senate action since December 18, 2025.
What would H.R. 6703 add if it passes the Senate? If enacted, H.R. 6703 would codify CHOICE Arrangements into federal statute, allow employees to use pre-tax payroll deductions to purchase ACA Marketplace coverage, create a two-year small employer tax credit, and shorten the advance notice requirement from 90 to 60 days. None of these provisions are currently in effect.
Can any employer offer a CHOICE Arrangement? Yes. Any employer with at least one W-2 employee can offer a CHOICE Arrangement. There is no minimum group size, no minimum participation threshold, and no federal cap on the monthly contribution amount.
Can employees still get ACA marketplace subsidies if their employer offers a CHOICE Arrangement? Employees who accept a CHOICE Arrangement benefit cannot receive ACA premium tax credits during the months they participate, regardless of income. Employees who receive an unaffordable CHOICE Arrangement offer may decline it and access marketplace subsidies instead. Clear employee communication about this trade-off is a required part of any CHOICE Arrangement rollout.
What is the 2026 affordability threshold for CHOICE Arrangements? For Applicable Large Employers subject to the ACA employer mandate, the 2026 affordability threshold is 9.96 percent of household income, per IRS Rev. Proc. 2025-25. A CHOICE Arrangement satisfies the employer mandate when the employee’s remaining share of the lowest-cost silver plan premium in their market, after the employer allowance, does not exceed that threshold. Affordability is calculated on a per-employee basis based on age, location, and income.
What is the employee notice requirement for CHOICE Arrangements? Under current rules, employers must provide employees with written notice at least 90 days before the start of each plan year. The notice must explain the allowance amount, how the CHOICE Arrangement interacts with ACA marketplace subsidy eligibility, and the employee’s option to decline. H.R. 6703 would shorten this to 60 days if enacted.
Take the Next Step
The rebrand from ICHRA to CHOICE Arrangements has not changed what the benefit does or how it works. It has signaled that the federal government intends to continue expanding awareness of a small business health insurance tool that growing numbers of employers are using to control costs and give employees more flexibility in their individual health coverage.
If you are a small business owner evaluating employee benefits for the first time or reconsidering an existing group plan, this is a practical time to understand what CHOICE Arrangements offer and how they compare to your current situation.
Reach out to YourMedPlan today for a no-cost review of your small business employee benefits options.
Disclaimer: This blog post provides general educational information about CHOICE Arrangements (formerly ICHRA) and does not constitute legal, tax, or compliance advice. The administrative rebrand announced September 3, 2026 reflects a federal outreach effort; the underlying regulatory framework governing CHOICE Arrangements remains the 2019 ICHRA rules. Provisions described as part of H.R. 6703 are proposed legislation that passed the House on December 17, 2025, and has not been enacted into law as of September 24, 2026. Employers should consult a licensed benefits advisor, qualified legal counsel, and a tax professional before implementing or modifying a CHOICE Arrangement.
SandStone Partners Health, LLC dba YourMedPlan is not affiliated with or endorsed by any government agency. This is an advertisement for insurance services. Not all carriers or plans are available in every state or region. Plan availability, benefits, and costs may vary by location.
