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A different way— to provide health benefits.
CHOICE Arrangements (ICHRA)
Traditional group health insurance generally asks the employer to select the health plan and employees to enroll in that plan.
A CHOICE Arrangement (ICHRA) turns that model around.
The employer establishes the benefit and the amount it is willing to contribute. Employees then purchase qualifying individual health insurance that fits their own circumstances, with the employer reimbursing eligible costs through the arrangement.
"Defined contribution" instead of "defined benefit."
That distinction matters.
With a traditional group health plan, the annual conversation can easily begin with the carrier’s renewal:
Here is next year’s plan. Here is next year’s price. Now what do we do?
A CHOICE Arrangement changes the starting point.
The employer starts by deciding what it wants to provide — and what it is prepared to spend.
That is the essence of a defined-contribution approach. The employer establishes its contribution within the applicable rules, rather than starting with the carrier’s renewal and deciding what increase or plan change it can tolerate or accept.
Employees then use that benefit to obtain qualifying individual coverage suited to their own circumstances.
More choice for employees.
Instead of an employer selecting one or perhaps a few group health plans for everyone, employees may have access to a broader range of individual health insurance choices.
That can allow employees to select coverage based on their own doctors, prescriptions, family circumstances and preferences — rather than assuming one employer-selected plan fits everyone.
Flexibility — but with rules.
CHOICE Arrangements can provide significant flexibility, but they are not an anything-goes benefit.
Federal rules govern such things as employee classes, eligibility, employer contributions, affordability, and how the arrangement interacts with eligibility for Marketplace premium tax credits.
That makes thoughtful design important
Could it work for your organization?
The useful question isn’t:
“Is a CHOICE Arrangement better than group health insurance?”
It’s:
“Could a CHOICE Arrangement work better for what this employer is trying to accomplish?”
That requires looking at the workforce, current benefits, costs, employee needs, available individual coverage, and the employer’s objectives.
Understand the workforce. Define the employer’s goals. Do the math.
Then decide whether CHOICE belongs in the conversation.