House Republicans are looking to finalize the details of their budget reconciliation package by the end of the month, which would include major changes to ICHRAs. The insurance model allows employees to shop on the ACA marketplace for a health plan using a tax-free stipend from their employer.
Three notes:
ICHRA becomes CHOICE
The proposal would rebrand ICHRA to Custom Health Option and Individual Care Expense (CHOICE) arrangements. This provision solidifies the 2019 regulations that now allow employers to use ICHRAs to help employees purchase individual coverage, as well as cover certain medical expenses, without violating group plan rules.
CHOICE participants could use cafeteria plans
Employees enrolled in a CHOICE arrangement could use salary reductions (via cafeteria plans) to pay for health insurance premiums purchased on the exchange. This would eliminate a previous rule that made it difficult for employers to offer both an ICHRA and cafeteria plan options simultaneously.
Small businesses could get a tax credit for offering CHOICE
Small businesses with fewer than 50 employees offering CHOICE arrangements for the first time could receive a tax credit. The credit would provide $100 per employee per month in the first year and $50 per employee per month in the second year.
