September 22, 2026
Louis C. Bernardi, “The Benefits Whisperer”
The Healthcare Heist Newsletter – by Lou Bernardi, The Benefits Whisperer, Certified Healthcare Fiduciary Coach, Certified Health Value Advisor.
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There is a new buzzword making its way through the employee benefits world: CHOICE Arrangements.
Well, sort of new.
What were previously known as Individual Coverage Health Reimbursement Arrangements, or ICHRAs, are now being promoted by the federal government as CHOICE Arrangements. The basic concept hasn’t fundamentally changed: instead of an employer selecting a traditional group health plan for everyone, the employer provides employees with tax-free dollars that can be used to purchase their own individual health insurance coverage.
On the surface, there is a lot to like.
Employers can establish a more predictable contribution strategy. Employees can choose among individual plans available where they live. And for certain employers—particularly those with employees scattered across multiple states—the economics can look very different from traditional group insurance.
But before we declare CHOICE Arrangements the next great solution to America’s healthcare problem, I think every plan sponsor should ask one simple question:
What problem are we actually trying to solve?
Because changing who buys the insurance doesn’t necessarily change how we buy healthcare.
There Are Real Reasons to Consider CHOICE
Let’s start with the positives.
Under a traditional employer plan, the company generally selects the insurance carrier, network and handful of plan designs available to employees.
With a CHOICE Arrangement, the employer determines how much it will contribute, while employees select individual coverage based on the options available to them where they live. CMS specifically tells employees to consider premiums, prescription coverage, deductibles, out-of-pocket costs, and whether preferred doctors and hospitals participate.
That can create some interesting opportunities.
Consider a New York employer with employees living throughout the country.
New York’s small-group market is community rated. State regulators describe small-group community rating as setting premiums without regard to factors such as age, sex, health status, tobacco use or occupation. New York defines small groups as those with 1–100 members.
Individual-market premiums work differently. Under federal rules, premiums can vary based on factors including age and geography, subject to state rules. Age-based premiums can generally vary by as much as 3:1 between older and younger adults.
For a New York employer with a younger workforce distributed across other states, that creates something worth investigating.
The individual-market economics could potentially be more attractive than the employer’s traditional group-market economics.
That’s not a guarantee. Geography, age, available carriers, plan design and employer contributions all matter.
But it’s absolutely worth doing the math.
But Don’t Confuse More Insurance Choices With Better Healthcare Access
Here’s where plan sponsors need to slow down.
More choice of insurance plans doesn’t necessarily mean more choice of healthcare.
Individual-market plans can have very different networks and rules than the commercial group plans employees are accustomed to.
Marketplace plans can include HMOs and EPOs as well as PPOs and other designs, depending on what’s offered locally. HMOs generally don’t cover non-emergency out-of-network care and may require someone to live or work within the service area. EPOs generally cover services only when members use network providers, except in emergencies. PPOs provide more flexibility to use out-of-network providers, typically at additional cost.
That distinction matters.
Imagine an employee living in New York with a child attending college in Florida.
Or an executive who travels extensively.
Or a family receiving care from specialists at a particular health system.
Or an employee undergoing cancer treatment who wants to make absolutely certain their physicians, facility and medications remain covered.
Suddenly, the cheapest individual plan may not look quite as attractive.
A lower premium isn’t much of a bargain if the healthcare you need isn’t accessible through the plan you selected.
That’s why employers evaluating CHOICE Arrangements should look beyond the spreadsheet.
The Word “Choice” Deserves Some Scrutiny
I actually like the name CHOICE because it forces us to ask an important question:
Choice of what?
Choice of insurance company?
Choice of deductible?
Choice of metal level?
Choice of network?
Or choice of the best physician and most appropriate care when an employee or family member gets seriously sick?
Those aren’t necessarily the same thing.
The Marketplace itself tells consumers that Bronze, Silver, Gold and Platinum categories describe how costs are divided—not the quality of healthcare—and advises consumers to verify whether their doctors, hospitals and prescriptions are included when comparing plans.
That’s an important distinction for employers accustomed to evaluating health plans primarily through premiums and benefits.
And Then There’s the Bigger Healthcare Heist Question
This is where I think the conversation gets really interesting.
Let’s assume a CHOICE Arrangement saves the employer money.
Great.
Let’s assume employees appreciate having more insurance options.
Even better.
But have we changed what the hospital charges?
Have we improved the quality of the physicians employees are seeing?
Have we eliminated unnecessary procedures?
Have we changed how specialty medications are purchased?
Have we addressed site-of-care differences?
Have we helped a member determine which surgeon produces the best outcomes?
Have we eliminated artificial healthcare prices?
Maybe. Maybe not.
That’s because a CHOICE Arrangement primarily changes the financing and purchasing structure of the insurance.
It doesn’t automatically transform the underlying healthcare delivery system.
And that’s an important distinction.
CHOICE Can Be a Tool. It Doesn’t Have to Be the Entire Toolbox.
This is where I believe benefit advisors, HR leaders and CEOs/CFOs need to think differently.
The conversation shouldn’t be:
Traditional group plan OR CHOICE Arrangement?
It should be:
What combination of strategies gives our employees the best healthcare our money can buy?
Maybe the answer is a traditional group plan.
Maybe it’s a high-performance self-funded plan.
Maybe it’s a CHOICE Arrangement.
And maybe CHOICE is the financing foundation supplemented by independent solutions that help employees navigate the healthcare system, identify high-quality physicians, manage expensive medications and make better healthcare decisions.
The objective shouldn’t be defending one model.
The objective should be better healthcare and better economics.
Before You Make the CHOICE, Ask Better Questions
If you’re considering a CHOICE Arrangement for 2027, don’t start by asking:
“How much will we save?”
Start with:
What problem are we trying to solve?
Then examine the economics, employee demographics, geography, provider networks, prescription formularies, deductibles, maximum out-of-pocket exposure and access to care.
Look employee by employee if necessary.
And don’t compare only the employer’s cost.
Compare the employee’s experience.
Because the goal shouldn’t be to save the employer $2,000 while creating a $5,000 problem for the employee.
Nor should we dismiss an alternative that could potentially create meaningful savings simply because it looks different from the health insurance we’ve purchased for the last 30 years.
Don’t Buy It Because It’s New. Don’t Reject It Because It’s Different.
That’s probably my biggest takeaway.
I’m encouraged that we’re having conversations about alternatives to the traditional employer-sponsored insurance model.
We need more of them.
But every new idea in healthcare eventually attracts its share of hype.
Plan sponsors don’t need hype.
They need information.
Understand what you’re buying.
Understand what you’re giving up.
Understand what your employees are gaining.
Understand the healthcare—not just the insurance.
And perhaps most importantly, remember this:
Changing who purchases the insurance isn’t necessarily the same thing as changing how healthcare is purchased.
The best strategy may ultimately accomplish both.
Because real choice shouldn’t simply mean having more insurance plans to choose from.
Real choice means giving people a better opportunity to get the right care, from the right provider, at the right price.
And that is a choice worth exploring.
Considering a CHOICE Arrangement for 2027?
Before making the move, get a second set of eyes on it.
At BritePath, we can help plan sponsors compare the economics and look beyond the premium, networks, employee geography, plan designs, prescriptions, access to care and how a CHOICE Arrangement compares with other strategies available to your organization.
Don’t ask whether CHOICE is better. Ask whether it’s better for your company and your people.
→ Request a 2027 CHOICE Arrangement Second Opinion
Contact the author at lcbernardi@britepathbenefits.com
Schedule a call at calendly.com/lcbernardi
Visit our website at www.britepathbenefits.com