SBA Promotes CHOICE Arrangements for Small Business Health

The U.S. Small Business Administration is promoting a health benefits option designed to give small employers more control over their costs. The program, now called CHOICE Arrangements, allows workers to select individual health insurance coverage.

According to an SBA news release, the agency joined the U.S. Department of Health and Human Services and Centers for Medicare and Medicaid Services to announce the initiative. SBA Administrator Kelly Loeffler and CMS Administrator Dr. Mehmet Oz unveiled the rebranded program and new employer resources at an event in Indiana.

How CHOICE Arrangements Work

Under this model, employers establish a fixed monthly contribution for health benefits instead of offering a traditional group health insurance plan. Employees can then use these employer-funded benefits to obtain qualifying individual health coverage. The SBA states that employers of any size with at least one W-2 employee can establish a CHOICE Arrangement.

The program was originally established during President Donald Trump's first administration as an alternative to traditional employer-sponsored group health plans. It was formerly known as Individual Coverage Health Reimbursement Arrangements, or ICHRAs.

Potential Benefits for Small Businesses

The SBA is positioning CHOICE Arrangements as an option for employers seeking an alternative to traditional group health coverage. This includes businesses offering health benefits for the first time. The agency cites potential benefits like predictable employer contributions and reduced administrative complexity.

Employer contributions are generally deductible as a business expense. Reimbursements for qualified medical expenses are generally tax-free to employees. The arrangement can also be scaled as a business changes.

SBA Pacific Regional Administrator Steven Snow endorsed the model. "CHOICE Arrangements give entrepreneurs greater flexibility to support their workforce, invest in their businesses, and continue strengthening their communities," Snow said in the release.

New Educational Resources

With the new CHOICE Arrangements branding, CMS is introducing educational resources intended to help employers. These materials include information on costs, employer contribution structures, and third-party administration options. The resources are designed to help businesses evaluate and implement the benefit.

The SBA's promotion focuses on providing entrepreneurs with more flexibility. The initiative aims to help small business owners support their employees while managing their own operational investments.