Federal officials are pointing to Indiana employers as examples of how businesses are using individual health insurance arrangements instead of traditional group plans. Centers for Medicare & Medicaid Services Administrator Mehmet Oz visited Indiana on Thursday to promote the newly branded CHOICE Arrangements program.
CHOICE Arrangements are the new federal name for Individual Coverage Health Reimbursement Arrangements, or ICHRAs. Employers set a monthly contribution for employees, who then purchase qualifying individual health insurance rather than enrolling in one employer-selected group policy.
Indiana already offers a tax incentive for smaller employers adopting health reimbursement arrangements. Businesses with fewer than 50 employees qualify for a credit of up to $400 per covered worker during the first year and $200 in the second year, subject to state requirements.
Oz said federal agencies will continue supporting the arrangements and urged more states and employers to examine the model. He also pointed to Indiana’s legislation as an example for states considering similar employer health benefit policies.
The CHOICE programs that are out there now, we will continue to embrace and endorse at the federal level. More companies should examine the health coverage options already available through individual markets.
Oz spoke at Hancock Health, an East Central Indiana health system that replaced its long-running self-funded group plan with an individual coverage arrangement. Hancock Health worked with Remodel Health on the transition and gives employees monthly employer-funded contributions toward individual insurance.
Hancock Health projects about $2.2 mn in annual employer savings under the new structure. Combined projected savings for the organization and participating employees reach roughly $3.7 mn, according to Remodel Health.
Matt Browning, Chief Operating Officer at Hancock Health, said employee dissatisfaction with the previous insurance offering contributed to the decision. The organization is spending more than $2 mn less on benefits while employees receive a larger selection of individual plans, he said.
More than 40% of participating Hancock employees now contribute less than $10 per month toward their insurance premiums. Remodel Health assists employees with comparing individual policies and choosing coverage based on their medical and financial needs.
CHOICE arrangements shift insurance selection from the employer to individual workers. Employees purchase qualifying coverage through the ACA marketplace, private individual markets or Medicare where federal rules permit, then receive reimbursement from their employer.
Austin Lehman, CEO of Remodel Health, said the model changes the insurance pool available to employees of smaller organizations. Instead of having claims experience concentrated within a workforce of a few hundred people, workers purchase policies inside the broader individual insurance market.
Large employers traditionally have an advantage when spreading medical costs across thousands of workers. Lehman said individual coverage lets employees at smaller businesses participate in a much larger statewide insurance pool rather than relying on the risk profile of their own workplace.
The federal promotion comes as employer health benefit expenses are accelerating. Marsh projects average employer health benefit costs per worker will rise 8.2% in 2027 after planned cost-control measures, the largest increase since 2003.
GLP-1 drug utilization is contributing to that increase, along with other prescription expenses and higher medical costs. Employers are therefore examining different benefit structures as traditional group plans become more expensive.
Changes to Medicaid are adding another variable to the US coverage market. The 2025 federal reconciliation law introduces work requirements and more frequent eligibility reviews for parts of the Medicaid population, with major provisions taking effect in 2027.
Indiana has adopted separate state Medicaid changes as well. An analysis by advocacy group Hoosier Action estimated that more than 100,000 people could lose coverage under the state’s measures, although Indiana’s Family and Social Services Administration disputed whether such an estimate could yet be made.
ACA individual markets are also operating with fewer enrollees following the expiration of enhanced federal premium tax credits at the end of 2025. Federal data show effectuated marketplace enrollment fell by nearly 3 mn between 2025 and 2026.
The administration has attributed part of that decline to stronger action against improper or fraudulent enrollment. KFF has also linked the reduction to higher consumer premium payments after enhanced subsidies expired, with average net premium payments rising sharply for many marketplace customers.
That decline matters for employers moving workers into CHOICE Arrangements because qualifying individual policies participate in the same broader individual insurance markets. Changes in enrollment and the health profile of remaining policyholders influence the insurance pools carriers use when setting future rates.
Oz treated the two issues separately during his Indiana appearance. He described CHOICE Arrangements as an opportunity for smaller employers to use individual insurance markets as an alternative to traditional group health coverage.
The federal government is now promoting a structure that has existed under the ICHRA name since 2020 rather than introducing a new insurance mechanism. The change centers on new CHOICE branding and a broader effort by CMS and the Small Business Administration to increase employer participation.
