Sponsors (12)
The bill expands access to employer-supported individual-market coverage and preserves tax-preferred treatment for participants while incentivizing small employers with a short-term refundable credit — at the cost of increased administrative burdens, potential market and equity effects, and reduced federal revenue.
Employees (including middle-class families and previously uninsured individuals) gain expanded options to have employer-funded HRAs or CHOICE arrangements reimburse individual-market premiums and out-of-pocket costs and keep pre-tax cafeteria benefits, increasing access to employer-associated individual coverage and lowering employee net costs.
Small and non-large employers receive a refundable business tax credit (up to $100/month in year one and $50/month in year two, usable against AMT) that lowers the net cost of offering CHOICE/HRAs and makes adoption more financially feasible.
Employees and taxpayers get more transparency because employers must report HRA/CHOICE benefit amounts on Form W-2, improving visibility into employer-provided health support and aiding tax administration.
Small employers and plan administrators face increased administrative and compliance burdens (W-2 reporting, enrollment substantiation, nondiscrimination rules), raising payroll/reporting costs and operational complexity.
Taxpayers bear the fiscal cost: refundable credits and extended tax-advantaged treatment for CHOICE participants reduce federal revenue and could modestly increase budgetary pressures or deficits.
Shifting more employees into individual-market coverage (via HRAs/CHOICE) could increase adverse selection or raise individual-market premiums over time, potentially increasing costs for consumers and the broader system.
Based on analysis of 4 sections of legislative text.
Creates rules and reporting for employer-funded CHOICE arrangements that reimburse individual-market coverage and care, exempts them from certain cafeteria-plan rules, and creates a two-year refundable employer credit.
Official title: To amend the Internal Revenue Code of 1986 to provide for the treatment of employer-provided health reimbursement arrangements that are integrated with individual market coverage, and for other purposes.
Introduced September 18, 2025 by Kevin Hern · Last progress September 18, 2025
Creates a new federal framework that treats certain employer-funded arrangements that pay for individual-market coverage and individual care expenses as qualifying health reimbursement arrangements ("CHOICE arrangements"). It changes tax and employee-benefit rules so employers may offer these arrangements without cafeteria-plan nondiscrimination treatment, requires employers to report amounts on Form W-2, directs agencies to align regulations, and creates a two-year refundable tax credit for eligible employers who offer CHOICE arrangements. The bill takes effect for plan years and taxable years beginning after December 31, 2025, and tasks Treasury, HHS, and DOL with conforming existing HRA and account-based plan rules to the new definitions and requirements.