CHOICE Arrangement Act

This bill generally provides statutory authority for certain health reimbursement arrangements and other alternative health insurance options for employers.

TITLE I--ASSOCIATION HEALTH PLANS ACT

This title provides statutory authority for the treatment of association health plans (AHPs) as single, large employers for purposes of the Employee Retirement Income Security Act (ERISA).

Under AHPs, groups of individuals or small employers join together to purchase health insurance coverage. AHPs were historically subject to the market requirements for individual and small group health plans. In 2018, the Department of Labor issued regulations that allowed an AHP to be considered a single, large employer under ERISA if certain conditions are met. The regulations have been subject to litigation, which is still ongoing.

The title provides that an AHP qualifies as a single, large employer if it (1) among other listed criteria, has been in existence for at least two years before offering health insurance and was formed for a purpose other than offering health insurance; (2) meets any criteria set by Labor in a prior advisory opinion; or (3) meets any other criteria set by Labor through regulations.

TITLE II--CHOICE ARRANGEMENT ACT

This title provides statutory authority for regulations that allow employers to offer individual coverage health reimbursement arrangements (ICHRAs).

Under ICHRAs, employers agree to reimburse employees for incurred medical expenses up to a limit for a specified period (e.g., a calendar year), and employees obtain their own individual coverage that meets certain requirements of the Patient Protection and Affordable Care Act (coverage of preventive services and no annual or lifetime limits). Payments or reimbursements under an ICHRA are tax-exempt and may only be made for medical care provided when the employee was covered by a plan that meets the requirements. Employees may also pair ICHRAs with Medicare coverage.

In 2019, the Department of the Treasury, the Department of Labor, and the Department of Health and Human Services issued regulations that allow employers to offer employees ICHRAs if certain conditions are met: (1) the employer offers ICHRAs to all employees in the same class (e.g., all full-time employees) without the choice of an employer-sponsored group health plan, and (2) the employer offers the ICHRA to all employees within the class on the same terms (i.e., the amount of available funds and the terms and conditions of the benefits). The regulations also specify certain notice and verification requirements with respect to ICHRAs.

The title provides statutory authority for these regulations and generally refers to ICHRAs as custom health option and individual care expense arrangements.

TITLE III--SELF-INSURANCE PROTECTION ACT

This title specifies that stop-loss coverage is not health insurance coverage for purposes of regulation under ERISA. It also specifies that ERISA preempts any state laws that prevent employers from obtaining stop-loss coverage. (Stop-loss coverage is liability insurance obtained by self-insured employers to cover the cost of health care expenses that exceed a certain level.)

TITLE IV--SMALL BUSINESS FLEXIBILITY ACT

This title requires the Internal Revenue Service to notify employers, particularly small businesses in rural areas, about the availability of ICHRAs, qualified small employer health reimbursement arrangements (QSEHRAs), and the small business health care tax credit. (QSEHRAs are available to employers with fewer than 50 full-time employees. The small business health care tax credit is available to employers with fewer than 25 full-time employees.)

TITLE V--RESCISSIONS

This title reduces FY2024 funding for the Prevention and Public Health Fund.

TITLE VI--SENSE OF CONGRESS THAT AMERICANS SHALL HAVE HEALTHCARE FREEDOM

This title expresses certain senses of Congress regarding the importance of health care freedom and free market practices.