Custom Health Option and Individual Care Expense (CHOICE)
A CHOICE Arrangement, also called a Health Insurance Reimbursement, is a type of employer-sponsored health benefit that helps cover the cost of qualified healthcare. CHOICE is the new name for an Individual Coverage HRA (ICHRA), though the offering stays the same. Instead of sponsoring a traditional group health insurance plan, a CHOICE arrangement offers an alternative that allows employers to provide a set contribution amount that employees can use toward coverage that fits their needs.
How does a CHOICE arrangement work?
With a CHOICE arrangement, employers determine how much they want to contribute toward employees' healthcare costs and establish a budget. Employees then enroll in qualifying health plans and receive reimbursement for eligible medical expenses up to the amount provided by their employer. Many organizations use benefits administration platforms to help manage reimbursements and compliance requirements.
Is a CHOICE arrangement the same as health insurance?
No. Unlike a traditional group health plan, a CHOICE arrangement doesn’t provide coverage directly. Instead, it’s a reimbursement arrangement that allows employers to reimburse employees for individual health insurance premiums, copays, medications, and other qualifying healthcare costs.
What are the benefits of a CHOICE arrangement?
Benefits of a CHOICE arrangement can include greater flexibility, predictable healthcare spending, and more choice for employees. They are also more accessible to smaller teams because they don’t have set participation minimums. Employers can set a fixed contribution amount, while employees can select the health plans that best fit their healthcare needs. For many organizations, a CHOICE arrangement is a great alternative to traditional group health insurance.
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