New tax break lets employers lock workers into benefits—no cash option allowed.
H.R. 8314 — OPTIONS Act · Filed by W. Steube (R-FL) · 1 cosponsor · Introduced Apr 15, 2026 · Referred to committee
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What it does
This bill creates a new tax code section allowing employers to offer employees a choice among tax-favored benefits (retirement contributions, health savings accounts, educational assistance) without triggering income tax on the employee. The key restriction: employees cannot choose cash instead—they must pick from the pre-approved benefit menu. The bill applies nondiscrimination rules to prevent highly compensated employees from gaming the system.
Why we flagged it
The bill's core mechanism is a new tax code section (125A) that permits—but does not mandate—employers to offer employees choice among pre-tax benefits while blocking cash elections. It is a permissive regulatory change, not a mandate or restriction on employers, and it expands employee choice within a constrained menu.
What the text implies
- Employers may use the 'no cash' rule to steer employees toward benefits with lower take-up rates (e.g., dependent care FSAs) that the employer prefers, reducing actual choice despite nominal flexibility.
- Employees in lower tax brackets or with irregular income may be forced to allocate employer money to benefits they cannot fully use (e.g., HSA contributions if they lack high-deductible coverage), effectively forfeiting the benefit.
The full analysis lists 4 implications of this text.
Who stands to gain
health insurance carriers (HSA/HRA administration); retirement plan administrators and custodians; educational assistance program providers