ICHRA Explained for Insurance Agents: Now Called CHOICE
ICHRA is now called a CHOICE Arrangement on HealthCare.gov. Here's what ACA agents need to know about eligibility, affordability, and enrollment timing before the next employer letter lands.
ICHRA Just Got a New Name. Here Is What Changed for Your ACA Clients If a client tells you their employer sent a letter about an "individual coverage HRA," check the date on that letter. HealthCare.gov's own small-business guidance now calls the same benefit a "CHOICE Arrangement," and says plainly that CHOICE Arrangements were "formerly known as the Individual Coverage Health Reimbursement Arrangements, or ICHRAs." The rules underneath the benefit have not changed. The name your clients will start seeing on employer paperwork has. For an agent who writes individual ACA business, this matters because a CHOICE Arrangement (still commonly called ICHRA, and we will use both terms here since most of the web and most employers have not caught up to the new name yet) can knock a client out of premium tax credit eligibility, put them on a different enrollment clock than the rest of your book, or send them looking for a Marketplace plan mid-year. Here is what to know before the next one lands in your inbox. What a CHOICE Arrangement (ICHRA) actually is A CHOICE Arrangement lets an employer reimburse an employee tax-free for individual health insurance premiums and other qualified medical expenses, instead of offering a traditional group plan. The employer sets a contribution amount; the employee shops for and buys their own coverage, most often on the ACA Marketplace, and submits for reimbursement. Employers can offer it to some employee classes and a traditional group plan to others, but they cannot offer the same class of employee a choice between the two, and they cannot combine a CHOICE Arrangement with SHOP or group coverage for the same class ( HealthCare.gov ). Eligible classes are limited to a fixed list: full-time, part-time, or seasonal status; salaried vs. non-salaried; new hires still in a waiting period; employees covered by a collective bargaining agreement; non-resident immigrants with no U.S. income; and work location, or a combination of these. Employers cannot invent their own categories. Within a class, the reimbursement amount can still vary by age (up to a 3:1 ratio) and number of dependents ( HealthCare.gov ). If an employer also offers a traditional group plan to any class, minimum class-size rules can apply to the CHOICE Arrangement classes: 10 employees for a group under 100, 10% of headcount for 100–200 employees, and 20 employees for larger groups ( HealthCare.gov ). The number that decides whether your client keeps their subsidy This is the part that actually changes your call with the client. A CHOICE Arrangement offer is tested for "affordability" the same way an employer group plan is: by comparing the employee's cost for the lowest-cost self-only Silver plan in their area, after the employer's contribution, to a percentage of household income. HealthCare.gov states that threshold at 9.96% of income for 2026 plans and 10.22% for 2027 ( HealthCare.gov ). If the offer is affordable : your client cannot claim the premium tax credit on a Marketplace plan, even if they turn the CHOICE Arrangement down. Accepting it is usually the better math. If the offer is unaffordable : your client can choose between using the CHOICE Arrangement or declining it and taking the premium tax credit on a Marketplace plan, but not both ( HealthCare.gov ). The employer's letter has to state the contribution amount and the plan year dates; the Marketplace application is what actually runs the affordability test once your client enters that information ( HealthCare.gov ). Do not let a client guess at this. Pull the number from the letter and run it before they decide anything. Coverage rules: what satisfies the offer, and what does not To use the reimbursement, the employee (and any household members the employer includes) must be enrolled in individual health insurance coverage, or in Medicare Parts A and B together, or Medicare Part C, by the time the CHOICE Arrangement starts. Short-term plans and other limited-benefit coverage do not satisfy this requirement ( HealthCare.gov ). If a client already has a short-term plan and thinks that covers them for a January CHOICE Arrangement, that is a conversation you want to have before December 15, not after. The enrollment clock: Open Enrollment, January 1, and when a CHOICE Arrangement creates a Special Enrollment Period The ACA Marketplace's annual Open Enrollment Period runs November 1 through January 15. Enroll or change plans by December 15 and coverage starts January 1; enroll between December 16 and January 15 and coverage starts February 1 ( HealthCare.gov ). (Note for the record: an earlier proposed CMS rule would have shortened this window to end in December, but the live HealthCare.gov schedule for 2027 coverage still runs through January 15 — see Verify before you publish below.) If a CHOICE Arrangement starts January 1, the employee generally enrolls during that same Open Enrollment window, same as any other Marketplace applicant. If the CHOICE Arrangement starts on any other date, or the employer offers it to a client mid-year, that triggers a Special Enrollment Period so the client can enroll in or change Marketplace coverage outside the annual window, timed to when the CHOICE Arrangement itself begins ( HealthCare.gov ). Employers are required to send the CHOICE Arrangement letter at least 90 days before the plan year starts, or by the first day coverage can begin for someone who becomes eligible partway through the year, such as a new hire ( HealthCare.gov ). That 90-day notice is your early warning system: a client who mentions getting one in October is telling you they have a decision to make well before AEP-season noise takes over your calendar. One more timing detail worth flagging to clients: if they change Marketplace plans outside Open Enrollment because of a new CHOICE Arrangement offer, the out-of-pocket costs and deductible they already paid toward their old plan do not automatically carry over to the new one. Carriers can choose to carry it over, but it is not guaranteed ( HealthCare.gov ). If you write ACA business, this is one more item competing for calendar space during the same window you are already managing renewals and passive re-enrollment. See ACA Open Enrollment 2027: An Agent's Readiness Checklist for the rest of that calendar, and AgencyView's ACA health insurance agent CRM page for how the platform is built around that workflow. What to ask when a client mentions an employer HRA letter Use this as a quick intake script the next time a client brings up an "HRA," "ICHRA," or "CHOICE Arrangement" letter from their employer: What is the exact contribution amount, and what plan-year dates does the letter show? Does the offer extend to the employee only, or to household members too? What is the household's total annual income, so you can run the affordability percentage against the lowest-cost self-only Silver plan in their area? When does the CHOICE Arrangement start? If it is not January 1, the client is likely inside a Special Enrollment Period window, not waiting for the next Open Enrollment. Do they currently hold a short-term or limited-benefit plan that would not satisfy the coverage requirement? Has the client already responded to the employer, or declined the offer, in writing? Get a copy for the file. A contact record built for this keeps that intake in one place. AgencyView's contact record carries an ACA coverage-type field for Marketplace exchange plans (FFM or state exchange) alongside the policies linked to that contact, so a CHOICE Arrangement-driven plan change during a client's Special Enrollment Period gets filed the same way any other coverage change does, on the same record you already use for the rest of their book. When the client is ready to shop, quoting and enrolling the new Marketplace plan happens from that same contact record through AgencyView's HealthSherpa connection, rather than in a separate tool you have to reconcile back into the CRM by…
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