What does Preamble of CHOICE Act do?

This bill proposes to amend the Internal Revenue Code of 1986. The amendment concerns the treatment of health reimbursement arrangements. These arrangements are specifically related to coverage within the individual market.

What does SHORT TITLE. of CHOICE Act do?

This bill is formally titled the Custom Health Option and Individual Care Expense Act.

What does TREATMENT OF HEALTH REIMBURSEMENT ARRANGEMENTS INTEGRATED WITH of CHOICE Act do?

This section amends Section 9815(b) of the Internal Revenue Code of 1986 to create exceptions for self-insured group health plans and custom health option and individual care expense arrangements. A 'custom health option and individual care expense arrangement' is defined as an employer-provided health reimbursement arrangement funded solely by employer contributions. These arrangements must provide payments or reimbursements for medical care subject to a maximum fixed dollar amount and only for periods during which the individual is covered by individual health insurance or under Medicare (Parts A & B or Part C). The arrangement must meet nondiscrimination, substantiation, and notice requirements. Nondiscrimination requires offering the arrangement to all employees within a specified class on the same terms, with exceptions for small group market health plans. Specified classes of employees can include full-time, part-time, salaried, non-salaried, employees within a specific rating area, and other categories as designated by the Secretary. The arrangement must have procedures to substantiate enrollment in qualifying coverage and requests for reimbursement. Eligible employees must receive written notice of their rights and obligations under the arrangement at least 60 days before the plan year begins. Section 6051(a) of the Code is amended to include the total amount of permitted benefits for enrolled individuals under a custom health option and individual care expense arrangement on a W-2. Existing rules related to health reimbursement arrangements and account-based group health plans, as prescribed in the Federal Register on June 20, 2019, are not affected by this section. The amendments apply to plan years beginning after December 31, 2025.

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

This section amends Section 125(f)(3) of the Internal Revenue Code of 1986. The amendment adds an exception to existing rules regarding the purchase of exchange insurance under a cafeteria plan. The exception applies to employees participating in a 'custom health option and individual care expense arrangement' offered by their employer. The amendment applies to taxable years beginning after December 31, 2025.

What does EMPLOYER CREDIT FOR CHOICE ARRANGEMENT. of CHOICE Act 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, employees must be treated as eligible for minimum essential coverage under section 36B(c)(2). A 'CHOICE arrangement' is defined as a custom health option and individual care expense arrangement as defined in section 9815(b)(2)(B). The 'credit period' is the first two one-year periods after the employer establishes the arrangement. An 'eligible employer' is one that is not an applicable large employer under section 4980H. The dollar amount of the credit is subject to inflation adjustments beginning in 2027, using the cost-of-living adjustment. The CHOICE arrangement credit is made part of the general business credit and is allowed against the alternative minimum tax. The amendments apply to taxable years beginning after December 31, 2025.

Back to bills

CHOICE Act

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

Author: Tim Sheehy (R-MT)

TL;DR (AI)

This bill creates a new type of employer-provided health reimbursement arrangement, called a 'custom health option and individual care expense arrangement,' allowing employers to reimburse employees for medical expenses when they are also enrolled in individual health insurance or Medicare.
The bill allows employees participating in these arrangements to continue making pre-tax contributions to purchase health insurance through the Affordable Care Act marketplaces.
Eligible small employers that offer these arrangements can receive a tax credit for the first two years the arrangement is in place, designed to offset costs.

119th Congressin committeeHR. 5463(In Committee)Official page

Verified Votes

No verified votes yet.

Community Votes

No community votes yet. Be the first!

Voting as guest · Sign in for verified votes

Other Sections

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

5 sections

Click "Show details" to explore individual sections. Use the community vote above or visit All Sections to vote per section.

Read official text

Want the full experience?

Create a free account to cast verified votes on each section, get a personalized summary, and track your voting history.

Create Free Account