The Individual Coverage Health Reimbursement Arrangement (ICHRA) has quickly become one of the fastest-growing health benefit models in the market. Now, it has a new name: CHOICE (Custom Health Option and Individual Care Expense) Arrangements or CHOICE Accounts.
The new branding was announced by the Centers for Medicare & Medicaid Services (CMS) and the U.S. Small Business Administration (SBA) September 3, 2026, but the underlying benefit remains unchanged.
While the name may be new, the core concept that has fueled ICHRA’s growth is the same. The benefit gives employers greater cost control while providing employees with more freedom to choose the health coverage that best fits their needs.
A Brief History of ICHRA
In 2019, ICHRAs were created following regulatory changes and became available to employers beginning in 2020. The model represented a significant shift from traditional employer-sponsored health plans where employers picked the health plans available for their employees.
Instead of selecting a single group health plan for all employees, employers can contribute a defined amount toward healthcare expenses, allowing employees to purchase individual health insurance coverage that meets their unique healthcare and financial needs. This approach combines employer support with consumer choice and has helped organizations address rising healthcare costs while offering greater flexibility.
The concept quickly caught on, and the market response has been remarkable. A 2026 whitepaper by DataPath on the market landscape identifies the following trends:
- ICHRA (now CHOICE Arrangement) adoption has grown by more than 1,000% since 2020.
- Large employer adoption increased by 34% between 2024 and 2025, while adoption among smaller employers increased by 52% during the same period.
- The number of covered lives participating in ICHRA and related HRA programs has approached or exceeded 500,000 people by 2026.
CHOICE Arrangements are becoming a mainstream strategy for employers seeking predictable costs, personalized benefits, and improved employee satisfaction.
From ICHRA to CHOICE Arrangements
For many employers, the term “Individual Coverage Health Reimbursement Arrangement” was difficult to remember and did little to explain the value of the benefit. The new CHOICE label conveys what is a key selling point for the accounts: employee choice, flexibility, and customization.
CMS and SBA have positioned the new terminology as a way to raise awareness among employers who may not have previously considered the model as an alternative to traditional group coverage.
Most importantly, the rebrand does not change how the benefit works:
- Employers provide tax-advantaged contributions,
- Employees select qualifying individual health plans,
- The same compliance and administration requirements remain in place
For the foreseeable future, many organizations will likely use both terms interchangeably.
A Positive Outlook, Creating More Opportunity
The name change is a positive step for benefits awareness and understanding; it is more marketable and easily recognizable for consumers and employers to embrace. Most importantly, CHOICE Arrangements keep intact the things that individuals and companies value most: predictable costs, personal choice, and flexibility.
The market’s rapid adoption, combined with growing federal support and awareness efforts, suggests this consumer-driven approach will continue to play an increasingly important role in the future of employer-sponsored healthcare. However, technology remains the key enabler.
As adoption grows, benefit administrators will need modern platforms, educational and decision-support resources, and streamlined administration to help participants make informed coverage decisions and maximize the value of their benefits.
CHOICE Arrangements (formerly ICHRAs) are creating a significant opportunity for benefit administrators looking to compete in this evolving market and employers looking to offer more flexible benefit options.
Is your benefits administration built for what’s next? Contact us to see how the DataPath platform supports CHOICE Arrangements and the administration work behind them.
