Employers can now legally dump group health plans for entire worker classes

What it does

This bill creates a new type of employer health benefit called a 'CHOICE arrangement' (Custom Health Option and Individual Care Expense arrangement) that allows employers to give employees a fixed dollar amount to buy their own individual health insurance on the open market instead of offering a traditional group health plan. Employers get a tax credit of $100 per employee per month in year one and $50 per month in year two, and employees can use pre-tax cafeteria plan dollars to purchase individual market insurance if their employer offers a CHOICE arrangement.

Why we flagged it

The bill fundamentally alters how employers can structure health benefits by creating a new pathway to fund individual market coverage instead of group plans. This is a structural market intervention, not a simple tax provision or benefit expansion.

What the text implies

• Employers can now legally exit group health plans for entire classes of employees (e.g., all part-time workers) by offering only CHOICE arrangements, potentially destabilizing group insurance risk pools and raising premiums for remaining group-plan participants.
• The bill exempts CHOICE arrangements from key ACA protections (pre-existing condition exclusions, preventive care coverage, out-of-pocket limits) by deeming them compliant with those rules without actually requiring compliance—employees must find individual market plans that meet those standards independently.
• Employees in CHOICE arrangements are excluded from using cafeteria plan pre-tax dollars for group health insurance (Section 3), creating a one-way door: once an employer switches to CHOICE, employees cannot opt into traditional group coverage even if they prefer it.
• The $100/$50 tax credit is temporary (2 years) and only applies to employers with fewer than 50 full-time employees, but the structural change to health benefits is permanent, creating a cliff effect when credits expire.
• Individual market coverage is not guaranteed to be affordable or available in all rating areas; the bill does not require employers to fund amounts sufficient to purchase actual coverage, only to offer the arrangement.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

The bill expands employee choice and may lower costs for some workers by letting employers fund individual market coverage, but it also allows employers to exit traditional group health plans entirely, potentially fragmenting risk pools and raising premiums for those remaining in group coverage. The tax credit is modest and time-limited, and the arrangement only works if employees can find affordable individual market coverage.

Who stands to gain

• Individual health insurance carriers (ACA marketplace insurers)
• Health insurance brokers and agents (commission-based sales)
• Small employers (reduced group plan administrative burden)
• Employers seeking to reduce health benefit costs

Named in the bill

Internal Revenue Code Section 9815, Public Health Service Act (Sections 2701, 2705, 2708, 2711, 2713, 2715), Social Security Act (Medicare Parts A, B, C), Section 125 cafeteria plans, Section 36B (ACA premium tax credit), Section 4980H (employer mandate), ACA individual market / health insurance exchanges, Department of Treasury, Department of Health and Human Services, Department of Labor

Where it stands

11 cosponsors: 11 Republicans.

• Sep 18, 2025 — Introduced · Congress.gov: “Introduced in House”
• Sep 18, 2025 — Referred to House Committee on Ways and Means · Congress.gov: “Referred to the House Committee on Ways and Means”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

12 lobbying clients named this bill on 14 disclosure filings across 2 quarters, Dec 2025 to Jun 2026. Those filings disclosed $20,300,000 in lobbying spend. A filing names 6 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 93% of bills with at least one filing.

Kevin Hern, the sponsor, reported $2,075,651 in PAC receipts in the 2026 cycle.

• Chamber of Commerce of the U.S.A. — $16,950,000 on 1 filing
• Nfib (national Federation of Independent Business) — $1,670,000 on 1 filing
• Health Care Service Corporation, a Mutual Legal Reserve Company (hcsc) — $730,000 on 1 filing
• Oscar Management Corporation — $370,000 on 1 filing
• Willis North America Inc. — $160,000 on 2 filings

Lobbying Disclosure Act filings through Jul 20, 2026. A filing shows who paid to lobby on a bill it names, not what changed.