Dr. Mehmet Oz stood before Austin business leaders this week to make the case for a health insurance alternative that lets employers hand employees tax-free cash to shop for their own coverage instead of signing everyone up for one group plan. The federal official pitched the arrangement, known as CHOICE, as a fix for a state where insurance costs keep climbing and marketplace options keep shrinking.
Oz, administrator of the Centers for Medicare and Medicaid Services, and Kelly Loeffler, administrator of the U.S. Small Business Administration, met with local business leaders in Austin and pitched the arrangement as an alternative to traditional employer-sponsored health insurance, according to the Austin American-Statesman. Oz spoke at Arena Hall in Austin on Wednesday, per the same report. The Custom Health Option and Individual Care Expense Arrangement, or CHOICE, was previously known as an Individual Coverage Health Reimbursement Arrangement, or ICHRA — a name federal officials dropped during a September 3 press conference at Hancock Health’s Hancock Wellness Center in New Palestine, Indiana, according to Remodel Health. The Austin stop followed that national rollout by less than a month.
Under CHOICE, employers give workers tax-free money to buy their own health insurance, either through the Affordable Care Act marketplace or by comparing off-marketplace plans through an insurance broker, the Statesman’s report notes. There is no maximum or minimum employer contribution, and companies can offer funds to employees flat or based on the number of dependents, though federal regulations require employers to contribute enough to meet an affordability threshold to claim a tax benefit. Employers must offer CHOICE to at least 10 to 20 employees depending on company size, and employees can make tax-free payroll deductions to cover any remaining insurance costs — though workers using CHOICE cannot receive federal marketplace subsidies, which are otherwise available to people making less than 400% of the federal poverty level.
A Decades-Old Idea With a Fresh Name
Individual Coverage Health Reimbursement Arrangements were originally established under federal regulations issued by the Trump administration in June 2019, following a 2017 executive order, and became available to employers on January 1, 2020, according to Healthinsurance.org. Oz said the COVID-19 pandemic and prior administrative disinterest halted momentum on the programs, per the Statesman. While CHOICE does not alter the underlying tax or legal framework of the older ICHRA rules, federal officials and plan administrators are leaning on the simpler name to accelerate adoption among employers facing double-digit group plan rate hikes, according to DataPath…