A Defining Moment for Employer Health Benefits: How the “One Big Beautiful Bill” Could Transform Healthcare for Employers

On May 13, 2025, the U.S. House Committee on Ways and Means introduced a bill aimed at extending the 2017 tax cuts. The reconciliation bill, currently under consideration in Congress, includes several exciting provisions for employer-sponsored healthcare that position consumers at the center. 

The “One Big Beautiful Bill” would codify Individual Coverage Health Reimbursement Arrangements (ICHRAs) — the personalized insurance model that has transformed how employers offer health benefits — into law as CHOICE Arrangements, or Custom Health Option and Individual Care Expense arrangements.  

The proposed shift represents a step towards more personalized and flexible healthcare benefits that meet the moment for today’s workforce. While the fundamental concept remains the same — employer-funded reimbursement for individual coverage — the bill suggests enhancements, including a streamlined notice period and the possibility of pre-tax premium payments on the Exchange. 

These provisions could usher in a new era where employees have greater control over their healthcare choices, and employers can offer quality benefits in a more cost-effective and efficient manner.  

Upleveling small business benefits

According to the U.S. Chamber of Commerce, small businesses employ nearly half of the American workforce and represent 43.5% of America’s GDP. Yet only 30% of small businesses offer health insurance — down from 47% in 2000 — with cost driving many small employers to drop their health benefits.  

The proposed bill introduces a new tax credit aimed at preventing small businesses from being priced out of health benefits. Businesses with fewer than 50 full-time employees that adopt CHOICE arrangements could receive a two-year tax credit of $100 per month per enrolled employee ($50 per month in the second year). 

We’ve already seen small business tax incentives work in Indiana, and other states are considering similar legislation. We believe, and hope, this will create more opportunities for small businesses to support their employees.  

Increased affordability, reduced administrative burden

The One Big Beautiful Bill proposes allowing pre-tax payment for individual health insurance premiums purchased on the Exchange — something currently only available with Medicare or off-exchange through a cafeteria plan. This is a significant shift, representing real savings for employees.

By allowing pre-tax payments, the effective cost of health insurance premiums would decrease for employees, increasing the appeal and affordability of exchange-based coverage. Employers would benefit from lower payroll taxes and more attractive benefits to help recruit and retain talent.  

The bill could also see the employer notice period reduced from 90 to 60 days. The notice period is the number of days before the start of the plan that employees should receive information about the HRA, including the dollar amount and whether the offer extends to dependents. Streamlined notice could ease administrative burdens and would be welcomed by employers who consider the 90-day requirement a pain point. 

Powering up health savings accounts

The bill includes some exciting provisions for Health Savings Accounts (HSAs) — the insurance model that combines a high-deductible health insurance plan (HDHP) with a tax-advantaged savings account. By redefining HDHPs to include any bronze or catastrophic plan on the individual market, Medicare Part A, and certain direct primary care (DPC) arrangements, the number of HSA-compatible plans could multiply.

The One Big Beautiful Bill also expands what HSA funds can pay for, with sports expenses like gym memberships and at-home fitness equipment potentially reimbursable. Given that the list of qualified medical expenses is the same for HSAs and ICHRA, employees with an ICHRA covering reimbursements for eligible expenses also stand to benefit. 

Encouraging the American public to stay healthy is a common-sense step toward controlling costs for individuals, employers, and the healthcare system as a whole — something we can all get behind. 

What’s next for the One Big Beautiful Bill?

Health insurance is only one aspect of the much larger bill under consideration. We know this is a partisan bill; however, it’s right down the fairway for ICHRA and the ACA. HRAs have been popular on both sides of the aisle ever since they were introduced. They bring more lives to the individual market — an important focus for Democrats — and deliver consumer choice and flexibility — things Republicans stand behind. The evolution of ICHRA into CHOICE arrangements promises to create a healthcare system where patients have more agency, where providers are incentivized to deliver high-value, patient-centered care, and where services are better coordinated to meet the individual needs of each consumer.  

While there are still many details that are still up in the air, and a long journey to a signature in the Oval Office, I’m keeping my eye on this. Employers, employees, and legislators on both sides of the aisle recognize the benefits of expanding access to HRA. Whether the One Big Beautiful Bill passes in its current form or not, Congress shouldn’t pass up this opportunity to codify ICHRAs into law and provide every American with a real choice when it comes to their healthcare.

Photo by Jabin Botsford/The Washington Post via Getty Images

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