CMS and SBA rebrand ICHRA as CHOICE Arrangements: Here’s what you need to know

Yesterday, the Centers for Medicare & Medicaid Services (CMS) and U.S. Small Business Administration (SBA) held a press conference (opens in new tab) announcing the rebrand of Individual Coverage Health Reimbursement Arrangements (ICHRAs) as CHOICE Arrangements.

The event was held in Indiana to highlight the state’s 2024 law establishing the nation’s first tax credit for small businesses offering ICHRAs and to encourage other states to consider similar incentives, to increase awareness and uptake of the model.

Qualifying Indiana employers with fewer than 50 employees can receive an ICHRA tax credit of up to $400 per covered employee in the first year and $200 per covered employee in the second. The credit can lower the cost of providing benefits while giving employees more choice over their health coverage. Other states (opens in new tab) including Mississippi and Connecticut recently enacted tax credits. Since 2025, 13 states have considered similar legislation or executive actions on ICHRAs, showing the bipartisan momentum this model has to benefit businesses everywhere.

“Rising health care costs have made the traditional one-size-fits-all approach increasingly difficult for employers and employees alike,” Oscar Health’s VP and Head of Government Affairs, Cathy Grason said. “CHOICE Agreements offer a more flexible path: employers can continue investing in benefits while employees have greater ability to select coverage works for their families, providers, prescriptions, and local market. State interest in CHOICE legislation is an important proof point. CMS and states are showing what is possible when policy and market innovation move in the same direction.”