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CompanyBreaking News: July 4, 2025 - ICHRA signed into law with major tax benefits; Name change to CHOICE in January 2026. WASHINGTON, D.C. – The landscape of health benefits has just experienced a seismic shift. The "One Big Beautiful Bill Act" has been officially signed into law, marking the most significant evolution in consumer-driven health benefits in years.
Effective for plan years beginning January 1, 2026, the Individual Coverage Health Reimbursement Arrangement (ICHRA) will be federally codified and rebranded as the CHOICE Arrangement (Custom Health Option and Individual Care Expense).
For insurance brokers and employers, this isn't just a name change. It's a fundamental enhancement of the health benefits model, packed with new incentives, greater flexibility, and the long-term stability the market has been craving. At DirectWay Health, we've been anticipating this future, and our platform is ready to help you lead the charge.
From ICHRA to CHOICE: What's Changing?
The CHOICE Arrangement takes the successful framework of ICHRA and supercharges it. Here are the key upgrades brokers need to know about:
Permanent Legal Footing: CHOICE is now codified into federal statute, removing any ambiguity about its permanence. This gives brokers and employers the unwavering confidence to adopt it as a long-term strategy.
A Powerful New Small Business Tax Credit: This is a game-changer. Small businesses (under 50 employees) can now receive a two-year tax credit of $100 per participating employee per month in year one, and $50 in year two. This provides a massive financial incentive to leave traditional group plans behind.
Pre-Tax Payments for All Plans: A major friction point has been eliminated. Employees can now use pre-tax salary reductions to pay for their health insurance premiums, including plans purchased on the public Marketplace (on-exchange). This dramatically improves affordability and simplifies the experience for employees. Unprecedented Flexibility for Small Businesses: Small employers can now offer both a CHOICE Arrangement and a traditional group health plan to the same class of employees, allowing their team to pick the option that best suits them. This opens entirely new and creative benefits strategies. Streamlined Administration: The required notice period for employers to inform their employees has been reduced from 90 days to a more agile 60 days. The Opportunity for Brokers: More Power, More Complexity
For forward-thinking brokers, the CHOICE Arrangement is a powerful catalyst for growth. You now have a stronger, more flexible, and financially attractive product to offer your clients. The new tax credit alone will open doors that were previously closed.
But with great power comes new complexity. Navigating the nuances of the tax credit, advising on the new "group plan or CHOICE" option, and educating clients on these changes can be overwhelming. This is where having the right technology partner isn't just an advantage—it's essential.
How DirectWay Health Is Built for the Future of CHOICE
At DirectWay Health, we don't see this as a pivot; we see it as an arrival. Our platform was designed for this exact future of flexibility and intelligence. Here’s how we are preparing our broker partners to lead with CHOICE from day one:
1. SuitabilityIQ™ is Already CHOICE-Ready: Our AI engine, SuitabilityIQ™, is being updated to automatically model the new small business tax credit. When you run a suitability check for a small group, you won't just show them ICHRA savings; you'll present them with a compelling, government-incentivized CHOICE financial plan. This makes your proposal nearly irresistible.
2. Seamlessly Integrated Flexibility: The new rule allowing small businesses to offer both group plans and CHOICE to the same class is a huge opportunity. Our platform's existing architecture for managing employee classes will make implementing this hybrid approach simple, allowing you to design sophisticated, custom-fit benefits strategies for your clients without the administrative headache.
3. Automating the New Compliance: From the new 60-day notice period to updated compliance documents reflecting the CHOICE terminology, our platform will handle it all. We are future-proofing your operations so you can focus on advising your clients, not reading regulatory updates.
4. An Empowered Employee Experience: The ability for employees to use pre-tax dollars for on-exchange plans is a massive win. Our employee enrollment portal will integrate this seamlessly, clearly showing employees their total costs and savings, and guiding them to the best plan with even greater financial clarity.
The Bottom Line: Don't Just Adapt to CHOICE—Lead with It
The transition from ICHRA to the CHOICE Arrangement will be the defining conversation in health benefits for the next 18 months. Brokers who are prepared with the right knowledge and the right technology will not only retain their clients but will also capture significant market share.
DirectWay Health is committed to being more than just a software provider. We are your strategic partner in this new era. Our platform is the engine that will allow you to harness the full power of CHOICE, turning legislative change into unprecedented business growth.
Ready to lead the charge?
Effective for plan years beginning January 1, 2026, the Individual Coverage Health Reimbursement Arrangement (ICHRA) will be federally codified and rebranded as the CHOICE Arrangement (Custom Health Option and Individual Care Expense).
For insurance brokers and employers, this isn't just a name change. It's a fundamental enhancement of the health benefits model, packed with new incentives, greater flexibility, and the long-term stability the market has been craving. At DirectWay Health, we've been anticipating this future, and our platform is ready to help you lead the charge.
From ICHRA to CHOICE: What's Changing?
The CHOICE Arrangement takes the successful framework of ICHRA and supercharges it. Here are the key upgrades brokers need to know about:
Permanent Legal Footing: CHOICE is now codified into federal statute, removing any ambiguity about its permanence. This gives brokers and employers the unwavering confidence to adopt it as a long-term strategy.
A Powerful New Small Business Tax Credit: This is a game-changer. Small businesses (under 50 employees) can now receive a two-year tax credit of $100 per participating employee per month in year one, and $50 in year two. This provides a massive financial incentive to leave traditional group plans behind.
Pre-Tax Payments for All Plans: A major friction point has been eliminated. Employees can now use pre-tax salary reductions to pay for their health insurance premiums, including plans purchased on the public Marketplace (on-exchange). This dramatically improves affordability and simplifies the experience for employees. Unprecedented Flexibility for Small Businesses: Small employers can now offer both a CHOICE Arrangement and a traditional group health plan to the same class of employees, allowing their team to pick the option that best suits them. This opens entirely new and creative benefits strategies. Streamlined Administration: The required notice period for employers to inform their employees has been reduced from 90 days to a more agile 60 days. The Opportunity for Brokers: More Power, More Complexity
For forward-thinking brokers, the CHOICE Arrangement is a powerful catalyst for growth. You now have a stronger, more flexible, and financially attractive product to offer your clients. The new tax credit alone will open doors that were previously closed.
But with great power comes new complexity. Navigating the nuances of the tax credit, advising on the new "group plan or CHOICE" option, and educating clients on these changes can be overwhelming. This is where having the right technology partner isn't just an advantage—it's essential.
How DirectWay Health Is Built for the Future of CHOICE
At DirectWay Health, we don't see this as a pivot; we see it as an arrival. Our platform was designed for this exact future of flexibility and intelligence. Here’s how we are preparing our broker partners to lead with CHOICE from day one:
1. SuitabilityIQ™ is Already CHOICE-Ready: Our AI engine, SuitabilityIQ™, is being updated to automatically model the new small business tax credit. When you run a suitability check for a small group, you won't just show them ICHRA savings; you'll present them with a compelling, government-incentivized CHOICE financial plan. This makes your proposal nearly irresistible.
2. Seamlessly Integrated Flexibility: The new rule allowing small businesses to offer both group plans and CHOICE to the same class is a huge opportunity. Our platform's existing architecture for managing employee classes will make implementing this hybrid approach simple, allowing you to design sophisticated, custom-fit benefits strategies for your clients without the administrative headache.
3. Automating the New Compliance: From the new 60-day notice period to updated compliance documents reflecting the CHOICE terminology, our platform will handle it all. We are future-proofing your operations so you can focus on advising your clients, not reading regulatory updates.
4. An Empowered Employee Experience: The ability for employees to use pre-tax dollars for on-exchange plans is a massive win. Our employee enrollment portal will integrate this seamlessly, clearly showing employees their total costs and savings, and guiding them to the best plan with even greater financial clarity.
The Bottom Line: Don't Just Adapt to CHOICE—Lead with It
The transition from ICHRA to the CHOICE Arrangement will be the defining conversation in health benefits for the next 18 months. Brokers who are prepared with the right knowledge and the right technology will not only retain their clients but will also capture significant market share.
DirectWay Health is committed to being more than just a software provider. We are your strategic partner in this new era. Our platform is the engine that will allow you to harness the full power of CHOICE, turning legislative change into unprecedented business growth.
Ready to lead the charge?
