What’s behind the growth of CHOICE arrangements?

They were once known as individual coverage health reimbursement arrangements. As of Sept. 3, they were rebranded as CHOICE arrangements. They’ve been available since 2020 and are increasing in popularity as a way for employers to provide health coverage to their workers.

Under CHOICE arrangements, employers give workers a fixed, tax-free amount to buy individual coverage.

A panel looked at what the growing use of CHOICE arrangements means for employers and workers during the 2026 EBRI-SHRM Health Benefits Symposium, sponsored by the Employee Benefit Research Institute and the Society for Human Resource Management.

“We are consumers in everything except for health coverage,” said Louis DeStefano, chief growth officer at Oscar Health. “True consumerism and defined contribution will determine how this segment will continue to grow.”

DeStefano predicted CHOICE won’t take over the entire employer-based healthcare system, “but it will be a key component in how employers evaluate their coverage offerings.

“It’s employer-sponsored coverage – just a different funding mechanism.”

DeStefano said CHOICE arrangements are considered “essential coverage” under the Affordable Care Act, whether the coverage is bought on or off the exchanges.

“Those protections that are part of essential coverage are there without underwriting,” he said. “You’ll see more innovation and product suites that support employers and workers.”

The more employers enter CHOICE arrangements, the bigger the risk pool, DeStefano said.

“This will be an advantage for consumers,” he said. “We have to compete for all your employees, and we can create innovative products that you wouldn’t be able to offer to your entire population.”

CHOICE solves several problems

There is a lack of education about CHOICE arrangements, but they solve several problems for employers and workers, said Brandy Thompson, CEO of benefitbay.

“The last few years have shown an unsustainable problem in employers' benefits,” she said. “Compounding rate increases, trying to contain costs inside the program – those are problems.”

Employers have tried to rein in costs by increasing deductibles, reducing coverage and removing some prescription drugs from coverage, Thompson said, but those moves have been unsustainable for their workers.

Thompson said every employer should look at CHOICE arrangements and brokers should quote them.

She said the ideal employee groups for a CHOICE arrangement are geographically dispersed teams, nonprofits and other mission-based organizations, and populations with long tenure within their organization.

CHOICE arrangements are not ideal for organizations in rural counties where few health insurance options are available.

Thompson predicted that CHOICE arrangements will lead carriers to compete for members and look for ways to invest in members’ preventive care.

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at susan.rupe@innfeedback.com.