CHOICE Act
Summary
What This Bill Does
The bill creates the CHOICE arrangement (Custom Health Option and Individual Care Expense arrangement) as a new HRA type under the IRC, amends Section 125(f)(3) IRC to allow employees in CHOICE arrangements to use cafeteria plan (pre-tax) funds for ACA exchange insurance. Removes the current barrier, and adds new Section 45BB to IRC creating employer tax credit for eligible small employers establishing CHOICE arrangements. $100/month per enrolled employee in year 1, $50/month in year 2. 2-year credit period. CPI. It relies on exemptions, tax credits, compliance mandates, and reporting requirements. The main policy areas are Finance, Healthcare, and Labor.
Who Benefits and How
ACA exchange marketplaces could gain revenue opportunities, Small employers establishing CHOICE arrangements could see lower costs, and Small employers (non-applicable large employers) could see lower costs.
Who Bears the Burden and How
Federal government (tax expenditure) could lose revenue opportunities, Federal government (reduced tax revenue) could lose revenue opportunities, and Federal government (tax revenue) could lose revenue opportunities.
Key Provisions
- Creates the CHOICE arrangement (Custom Health Option and Individual Care Expense arrangement) as a new HRA type under the IRC.
- Amends Section 125(f)(3) IRC to allow employees in CHOICE arrangements to use cafeteria plan (pre-tax) funds for ACA exchange insurance. Removes the current barrier.
- Adds new Section 45BB to IRC creating employer tax credit for eligible small employers establishing CHOICE arrangements. $100/month per enrolled employee in year 1, $50/month in year 2. 2-year credit period. CPI...
- Creates inserted text of new Section 45BB IRC: $100/month (year 1) and $50/month (year 2) per-employee credit for eligible small employers maintaining CHOICE arrangements.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
The bill creates the CHOICE arrangement (Custom Health Option and Individual Care Expense arrangement) as a new HRA type under the IRC, amends Section 125(f)(3) IRC to allow employees in CHOICE arrangements to use cafeteria plan (pre-tax) funds for ACA exchange insurance. Removes the current barrier, and adds new Section 45BB to IRC creating employer tax credit for eligible small employers establishing CHOICE arrangements. $100/month per enrolled employee in year 1, $50/month in year 2. 2-year credit period. CPI.
Key Policy Areas
Finance, Healthcare, Labor
Primary Purpose
The bill creates the CHOICE arrangement (Custom Health Option and Individual Care Expense arrangement) as a new HRA type under the IRC, amends Section 125(f)(3) IRC to allow employees in CHOICE arrangements to use cafeteria plan (pre-tax) funds for ACA exchange insurance. Removes the current barrier, and adds new Section 45BB to IRC creating employer tax credit for eligible small employers establishing CHOICE arrangements. $100/month per enrolled employee in year 1, $50/month in year 2. 2-year credit period. CPI.
Policy Domains
CHOICE Act - Health Reimbursement Arrangements
Identified Gains
- ACA exchange marketplaces
- Small employers establishing CHOICE arrangements
- Small employers (non-applicable large employers)
- Employees in CHOICE arrangements
- Individual health insurance market issuers
Identified Costs
- Federal government (tax expenditure)
- Federal government (reduced tax revenue)
- Federal government (tax revenue)
- Traditional group health insurance providers
Sponsors
Legislative Progress
In CommitteeMr. Sheehy introduced the following bill; which was read twice …
Read twice and referred to the Committee on Finance.
Introduced in Senate
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
ACA exchange marketplaces, Individual health insurance market, Individual health insurance market issuers
Positive-direction: ACA exchange marketplaces, Individual health insurance market, Individual health insurance market issuers
Negative-direction: Traditional group health insurance providers
Federal government (reduced tax revenue), Federal government (tax expenditure), Federal government (tax revenue)
Small employers (non-applicable large employers), Small employers establishing CHOICE arrangements
Employees in CHOICE arrangements, Employees of participating employers
Employers offering the CHOICE arrangement, Small and mid-size employers
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "the_secretary"
- → Secretary of the Treasury
Key Definitions
Terms defined in this bill
The first 2 one-year periods beginning with the month during which the employer first establishes a CHOICE arrangement
Any of the following: full-time employees, part-time employees, salaried employees, non-salaried employees, employees in the same rating area, collective bargaining unit employees
An employer who is not an applicable large employer for the calendar year under section 4980H
A health reimbursement arrangement funded solely by employer contributions to provide payments or reimbursements for medical care subject to a maximum fixed dollar amount
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology