Choice Arrangement
Summary
H.R. 5463, the "Choice Arrangement Act of 2025," amends the Internal Revenue Code of 1986 to address employer-provided health reimbursement arrangements (HRAs) integrated with individual market coverage. It aims to provide a framework for 'custom health option and individual care expense arrangements,' allowing employers to contribute to employees' health coverage through individual market plans or Medicare. The bill also includes provisions for employer tax credits related to these arrangements.
Expected Effects
The bill will likely increase the availability of HRAs integrated with individual health insurance coverage. This could lead to more employers offering this type of benefit, potentially expanding healthcare options for employees. It also introduces tax credits for employers, which could incentivize the adoption of these arrangements.
Potential Benefits
- Increased healthcare choices for employees through individual market coverage.
- Potential for lower healthcare costs for some employers due to the HRA structure.
- Tax credits for eligible employers, incentivizing the adoption of Choice Arrangements.
- Clarification of rules regarding HRAs and their integration with individual market coverage.
- Flexibility for employers to offer different health benefits to different classes of employees.
Potential Disadvantages
- Potential complexity for employees in navigating individual health insurance markets.
- Risk of adverse selection in the individual market if healthier employees opt for HRAs.
- Administrative burden for employers to comply with nondiscrimination, substantiation, and notice requirements.
- Possible limitations on the scope of benefits covered under individual market plans compared to traditional group health plans.
- The fixed dollar amount of the HRA may not adequately cover all medical expenses.
Constitutional Alignment
The bill's provisions related to taxation and healthcare fall under the broad authority granted to Congress by Article I, Section 8 of the Constitution, which allows Congress to lay and collect taxes to provide for the general welfare. The regulation of health insurance and employer-provided benefits is generally considered within the scope of federal power, although debates often arise regarding the extent of this power under the Commerce Clause. The bill does not appear to infringe upon any specific individual rights or liberties protected by the Constitution or its amendments.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).