ICHRA is now CHOICE. Will more employers choose it?

Bye-bye, ICHRA. Hello, CHOICE.

The scheme that allows employers to reimburse their workers to buy their own health insurance on the individual marketplace has a new name, per a Sept. 3 announcement from the Centers for Medicare and Medicaid Services (CMS) and the Small Business Administration (SBA). But aside from that, not much else about the option is changing.

Brokers and administrators are hopeful that the rebrand will help convince more employers to offer ICHRAs to their workers. While the arrangement has been around since 2020, it’s not nearly as popular as traditional group health plans. As of 2025 just 4% of firms offered ICHRA-like plans, according to KFF, whereas 61% offered health benefits overall.

Part of the strategy behind rebranding Individual Coverage Health Reimbursement Arrangements (ICHRA) to Custom Health Option and Individual Care Expense Arrangements (CHOICE) is to promote an “underused option” to small businesses, CMS Administrator Mehmet Oz said at a Sept. 14 press conference.

Health industry leaders are hopeful that the federal government will consider some changes in the near future to make this healthcare approach more attractive to employers.

Why CHOICE? President Donald Trump’s administration is making a push for businesses to consider CHOICE arrangements at a time when high health costs are weighing on employers’ benefit strategies. Overall healthcare costs are expected to rise by 9.5% in 2027, according to a July estimate from professional services firm Aon.

An executive with Take Command, a third-party vendor that administers CHOICE plans on behalf of employers, said that this arrangement is a more cost-effective option for businesses given these trends.

“Texas employers are under pressure from rising healthcare costs,” Take Command CEO Jack Hooper said at a Sept. 30 event with Trump administration officials in Austin. “Businesses facing double-digit renewals found a powerful alternative to traditional group plans in CHOICE.”

While CHOICE arrangements may save employers money on healthcare, switching from a traditional group health plan presents other challenges for HR teams, sources told HR Brew earlier this year. BrightView Health, which is a client of Take Command’s, is seeing “significant savings” from the switch,” Rachel Fitzgerald, an HR business partner, said in April. But Fitzgerald also cited challenges her team is working through as a result of transitioning to CHOICE, including shifts in the individual marketplace that have limited employees’ options and caused their health costs to go up, in some cases.

Trump officials are particularly keen to promote CHOICE arrangements to small businesses that may not already offer health insurance to workers. Indeed, this appears to be the most likely adopter, according to recent data from the Health Reimbursement Arrangement Council, which found more than two-thirds of companies offering CHOICE arrangements in 2026 previously didn’t offer any health coverage to employees.

CHOICE may help small businesses better compete with the likes of “Ford and GM and Lockheed and Boeing, who offer major benefit plans,” Small Business Administrator Kelly Loeffler said at the Sept. 30 event.

Bullish on the future. If there’s any doubt that CHOICE plans will take off among employers, it wasn’t apparent at a recent event hosted by SureCo, a CHOICE administrator focusing on larger companies, in Manhattan.

“Six years ago…it was a total fight,” to get brokers to consider CHOICE (then ICHRA) plans for their clients, SureCo co-founder Matt Christopherson told HR Brew. About three years ago he said that shifted, as brokers started learning more about ICHRAs. “All of a sudden, they’re calling us. Obviously, a lot more competitors have jumped in the market since then, and that’s helped us as well.”

The share of brokers who have moved at least one client to CHOICE plans grew from 15% in 2024 to 37% in 2026, according to a report published by SureCo in May.

“As soon as they changed it to CHOICE, I wanted to open a bottle of Veuve Cliquot, immediately,” Federico Salvitti, SureCo’s chief growth officer, said. He said he expects generative engine optimization, which refers to strategies companies use to get discovered by AI-enabled search engines, to see a bump from the change.

“The timing of moving to the CHOICE naming is just advantageous because I feel like we’re at a little bit of an inflection point,” said Andrew Reeves, VP and general manager of CHOICE arrangements for Oscar Insurance, a division of Oscar Health. “It’s a fresh start, and now more people will have heard of it.”

Industry leaders contended that CHOICE isn’t perfect; Christopherson said there’s been rumblings that the administration will roll out a 2.0 version sometime this fall. Among the areas where leaders said they’d like to see tweaks to CHOICE is the cancellation process, which puts the onus on the employee, rather than the employer, and can result in unexpected bills when workers terminate their coverage or switch plans.