The federal government has a new name for a benefits model that small employers have been slow to adopt, and it is spending political capital to change that. The Small Business Administration (SBA) and Centers for Medicare and Medicaid Services (CMS) announced that individual coverage health reimbursement arrangements (ICHRAs) will now be marketed as CHOICE Arrangements, with SBA administrator Kelly Loeffler and CMS administrator Mehmet Oz unveiling new employer resources at an event in Indiana. The mechanism is unchanged: employers set a fixed monthly contribution, and employees use those funds to buy qualifying individual health coverage of their choosing.
ICHRAs have existed since 2020, when the first Trump administration created them as an alternative to traditional group plans. The rebrand is the current administration's push to expand uptake among the small employers where adoption has lagged and the coverage gap is widest. Just over half of small businesses with fewer than 100 employees offered any health plan in 2024, according to KFF data, with the figure dropping to 32% at firms with fewer than 10 employees.
ICHRA adoption has accelerated since 2020. The HRA Council's 2025-2026 annual data report found that the number of employers offering ICHRAs grew 99% from 2025 to 2026, with covered lives surpassing 500,000 as of January. About two-thirds of small employers offering an ICHRA in 2026 had not previously provided any health coverage, so the model is reaching employers that group plans had not.
Those numbers remain small relative to the roughly 150 million Americans in traditional employer-sponsored coverage. The Peterson-KFF Health System Tracker noted in January that the individual market's 2026 premium surge and subsidy expiration had reduced the model's appeal to cost-sensitive small employers at the same moment the SBA began promoting it. When a fixed employer contribution buys less individual coverage because marketplace premiums have risen sharply, the cost predictability the SBA promotes becomes harder to deliver.
The broker compensation question is where ICHRA's growth creates the most direct tension. Under a traditional group plan, the employer pays a carrier premium and the broker earns a commission from that carrier. Under an ICHRA, employees purchase individual plans independently and that commission flow changes. A Peterson-KFF analysis published in January found that some ICHRA administrators assume the agent-of-record role at renewal, which transfers commission income away from the original broker. Others split commissions or build a per-employee-per-month fee into the administrator contract to retain broker involvement, but those structures are not standardized across the market.
The SBA's promotional materials address employer cost predictability and tax advantages but say nothing about how broker compensation works under the model. Advisers fielding small-employer inquiries about CHOICE Arrangements will need to work through the administrator's compensation structure before recommending a specific platform, since that choice determines whether the broker retains the client relationship at renewal or cedes it. With small-group premiums heading into 2027 at a national median increase of 14%, according to KFF, the federal push will generate employer questions about alternatives regardless of whether advisers raise them first.
