Frequently Asked Questions

Hmm, yes and no. Here’s why: Employers can offer CHOICE Arrangements to one segment of employees while offering a traditional group plan to a different segment of employees.

However, employers are not allowed to offer both CHOICE Arrangements and a traditional group plan to the same segment of employees. To determine allowable class distinctions, just refer to official IRS CHOICE Arrangements regulations or talk to a tax professional.

Yes. If designed correctly, CHOICE Arrangements satisfies the Affordable Care Act (ACA) employer mandate for Applicable Large Employers (ALEs). To determine if CHOICE Arrangements is right for your business, take a look at the official IRS CHOICE Arrangements regulations or talk to a tax professional.

No, it’s not a legal requirement. That said, it is strongly advised to administer an ICHRA through a third party to ensure compliance with IRS regulations such as HIPAA.

To learn more about ICHRA compliance, please refer to official IRS ICHRA regulations or talk to a tax professional.

In most cases, an employer works with a third party (broker and/or CHOICE Arrangements administration platform) to design and implement their company’s CHOICE Arrangements. This process typically requires the employer to determine their budget, decide which employees can and cannot participate in CHOICE Arrangements, and establish when to launch the new health benefits solution to employees.

Once CHOICE Arrangements is introduced to the company, employees get to shop for an individual insurance plan on the open market and buy a plan that suits their unique needs. Then, employees seek tax-free reimbursements from their employer each month.

CHOICE Arrangements (previously known as ICHRA) stands for Custom Health Option and Individual Care Expense. It’s a type of Health Reimbursement Arrangement (HRA) created in 2020. It’s great because it allows businesses of any size to provide tax-free reimbursements to employees for health insurance premiums and qualified medical expenses.

Employers of any size can offer CHOICE Arrangements so long as they have at least one employee who isn’t a self-employed owner or the spouse of a self-employed owner. If designed correctly, an ICHRA satisfies the Affordable Care Act (ACA) employer mandate for Applicable Large Employers (ALEs).

To determine if CHOICE Arrangements is right for your business, take a look at the official IRS CHOICE Arrangements regulations or talk to a tax professional.

Yes. You can divide your team into clear legal "classes" (like full-time, part-time, seasonal, or by geographic location). While everyone within a specific class must get the same allowance, you can vary the stipend amounts between classes to match your hiring strategy.

While it’s perfect for health insurance premium payments, an CHOICE Arrangements can also be used to buy dental, vision, and other supplemental coverage. Depending on how you structure your plan, employees can even put those tax-free dollars towards everyday medical expenses like copays, prescriptions, and deductibles.

It makes compliance surprisingly simple. CHOICE Arrangements satisfies the mandate perfectly as long as your monthly tax-free stipend meets the ACA's "affordability" rules and is offered fairly across your employee classes. Put simply, you completely avoid costly penalties without the headache of managing a volatile group plan.

No need to write individual checks or manage complex carrier billing histories. Oscar partners with top-rated third-party platform administrators who handle the operational heavy lifting. Typically, employees buy their plan directly. Then the platform automatically syncs with your payroll to reimburse them with tax-free dollars behind the scenes.

It can be a great fit for both, just for different reasons. For small businesses (under 50 employees), it eliminates the stress of minimum participation rules. It also cuts out the medical underwriting that often blocks small shops from offering coverage at all. For larger companies (50+), it offers a highly predictable, tax-free alternative to volatile traditional group plans. That way, you can cap your healthcare liabilities down to the penny.

Traditional group plans subject your bottom line to volatile, double-digit rate hikes at every annual renewal. With an CHOICE Arrangements, you completely step off that renewal treadmill. By defining a fixed monthly contribution rather than buying a specific plan, you decide if, when, and by how much your healthcare budget increases.