Bill > S2875

This bill (the CHOICE Act) establishes a new type of health reimbursement arrangement (HRA) that allows employers to provide tax-advantaged funds for employees to purchase individual health insurance coverage. Specifically, the bill creates a "custom health option and individual care expense arrangement" where employers can contribute a fixed dollar amount for employees to use for medical expenses, but only if the employee is enrolled in individual health insurance or Medicare. The arrangement must meet several key requirements: it must be offered equally to all employees within a specific class (such as full-time or part-time workers), have reasonable procedures to verify health coverage, and provide clear notice to employees about the arrangement. The bill also provides a tax credit for eligible smaller employers who establish these arrangements, offering $100 per employee per month in the first year and half that amount in the second year. Additionally, the bill allows employees participating in these arrangements to purchase health insurance through a cafeteria plan and requires employers to report the total permitted benefits on employee W-2 forms. These provisions would take effect for plan years beginning after December 31, 2025, giving employers time to prepare for the new option.