What does Preamble of HR 5463 do?

This bill proposes to amend the Internal Revenue Code of 1986. The amendment concerns the treatment of employer-provided health reimbursement arrangements. These arrangements are specifically those integrated with individual market coverage.

What does SHORT TITLE. of HR 5463 do?

This bill is formally titled the Choice Arrangement Act of 2025.

What does TREATMENT OF HEALTH REIMBURSEMENT ARRANGEMENTS INTEGRATED WITH of HR 5463 do?

This section amends Section 9815(b) of the Internal Revenue Code of 1986 to establish rules for the treatment of 'custom health option and individual care expense arrangements'. These arrangements are defined as employer-provided health reimbursement arrangements funded solely by employer contributions, providing payments for medical care up to a maximum fixed dollar amount. To be considered compliant, these arrangements must provide payments or reimbursements only for medical care during periods when the individual has coverage under individual health insurance or Medicare. The arrangements must also meet nondiscrimination, substantiation, and notice requirements. The nondiscrimination requirement stipulates that employers offering the arrangement to a specified class of employees must offer it to all within that class on the same terms. Specified classes of employees can include full-time, part-time, salaried, or non-salaried employees, among others. Employers must provide written notice to eligible employees regarding their rights and obligations under the arrangement, typically 60 days before the plan year begins. Section 6051(a) of the Code is amended to include the total amount of permitted benefits from these arrangements on an employee's W-2 form. Existing rules regarding health reimbursement arrangements are not to be inferred from these amendments. The amendments apply to plan years beginning after December 31, 2025.

What does PARTICIPANTS IN CHOICE ARRANGEMENT ELIGIBLE FOR PURCHASE OF of HR 5463 do?

This section amends Section 125(f)(3) of the Internal Revenue Code of 1986. The amendment adds an exception to the application of subparagraph (A) for employees participating in a custom health option and individual care expense arrangement. This arrangement is defined within the meaning of section 9815(b)(2). The amendment applies to taxable years beginning after December 31, 2025.

What does EMPLOYER CREDIT FOR CHOICE ARRANGEMENT. of HR 5463 do?

This section amends the Internal Revenue Code of 1986 to establish a CHOICE arrangement credit for eligible employers. The credit amount is calculated based on the number of months an employee is enrolled in a CHOICE arrangement, with different rates for the first and second years of the credit period. To be eligible, an employee's enrollment must provide minimum essential coverage and the employer must not be an applicable large employer. The credit amount is adjusted for inflation starting in taxable years beginning after 2026. The CHOICE arrangement credit is made part of the general business credit and can be used against the alternative minimum tax. The 'credit period' is defined as the first two one-year periods after an employer establishes a CHOICE arrangement. A 'CHOICE arrangement' is defined as a custom health option and individual care expense arrangement.

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Choice Arrangement — HR. 5463

Last updated: 9/18/2025 · Introduced: 9/18/2025

Author: Kevin Hern (R-OK)

TL;DR (AI)

This bill establishes rules for 'custom health option and individual care expense arrangements,' which are employer-provided health reimbursement arrangements that reimburse medical expenses only when an individual has individual health insurance or Medicare coverage.
The bill allows employees participating in these arrangements to benefit from existing Section 125 rules regarding tax-advantaged health benefits.
Eligible employers offering these arrangements may be eligible for a new tax credit, calculated based on employee enrollment and adjusted for inflation, to help offset costs.

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Includes provisions on preamble, short title., and 3 more.

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