S-2875 : Still Just a Bill

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Here is a summary of S. 2875, also known as the CHOICE Act:

• Purpose: Amends the Internal Revenue Code of 1986 to address health reimbursement arrangements integrated with individual market coverage.
• Key Provisions:
  • Treats "custom health option and individual care expense arrangements" (CHOICE arrangements) as meeting certain requirements under the Public Health Service Act, ensuring compliance with health coverage standards.
  • Defines CHOICE arrangements as employer-provided group health plans funded solely by employer contributions for medical care reimbursements, subject to a fixed dollar amount.
  • Specifies that reimbursements can only be made for medical care during periods when the individual is covered under individual health insurance, Medicare Parts A and B, or Medicare Part C.
  • Establishes nondiscrimination requirements, ensuring the arrangement is offered on the same terms to all employees within a specified class.
  • Requires procedures to substantiate that participants are enrolled in qualifying health coverage.
  • Mandates that employees receive written notice of their rights and obligations under the arrangement.
  • Permits participants in a CHOICE arrangement to purchase exchange insurance under a cafeteria plan.
  • Establishes an employer credit for CHOICE arrangements, providing a tax credit for eligible employers for each employee enrolled in the arrangement during the first two years.
• Effective Date: The amendments made by this bill apply to plan years beginning after December 31, 2025.

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