Choice Arrangement
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Progress
Where this bill stands in the legislative process.
- Introduced
- Passed House
- Passed Senate
- To President
- Became Law
Overview
This bill, the Choice Arrangement Act of 2025, amends the Internal Revenue Code to treat certain employer-provided health reimbursement arrangements (HRAs) as ‘custom health option and individual care expense arrangements.’ These HRAs, funded solely by employer contributions and covering medical care during periods of individual health insurance coverage, would be treated similarly to existing account-based and public health coverage plans. The bill also includes provisions for a new tax credit for employers offering these arrangements, and adjustments to tax withholding rules for employees participating in them.
Key provisions
- Defines ‘custom health option and individual care expense arrangements’ as specific types of employer-provided HRAs.
- Treats these HRAs as meeting certain requirements similar to those for account-based and public health coverage plans.
- Establishes a tax credit for employers offering these arrangements, with a phased-in credit over two years.
- Modifies Section 125 to allow eligible employees participating in these arrangements to purchase exchange-based insurance.
- Adjusts Section 6051 to include the total amount of permitted benefits for enrolled individuals in these arrangements on W-2 forms.
- Clarifies the definition of ‘eligible employer’ for the purpose of the employer credit.
- Provides for an inflation adjustment to the employer credit amount starting in 2026.
- Allows the employer credit to be taken as part of the general business credit and as a deduction against the alternative minimum tax.
Bill text
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Sponsors
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12 on record
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