One Big Beautiful Bill: What It Could Mean for ICHRAs, Healthcare Financial Planning, and the Future of Employee Benefits

<blog-icon-title>One Big Beautiful Bill: What It Could Mean for ICHRAs, Healthcare Financial Planning, and the Future of Employee Benefits<blog-icon-title>

On May 13, 2025, the House Ways and Means Committee unveiled what it's calling the “One Big Beautiful Bill,” a sweeping legislative proposal that aims to extend the 2017 tax cuts and reshape a wide range of economic and social policies.

Among headlines and partisan soundbites lies something employers and benefits professionals should pay close attention to: major proposed changes to healthcare benefits, including enhancements to ICHRAs (rebranded as “CHOICE” Arrangements), expanded HSA/FSA flexibility, and new tax incentives for small businesses.

Let’s break down what this bill could mean for the future of health benefits—and what employers should be watching now.

CHOICE Arrangements: The next generation of ICHRA?

Perhaps the most exciting update for benefits professionals is the proposed codification of Individual Coverage Health Reimbursement Arrangements (ICHRAs) into law—not to mention the potential rebranding as “CHOICE Arrangements,” short for Custom Health Option and Individual Care Expense. 

For the sake of clarity, we’ll continue referring to the model as “ICHRA” throughout this article. That said, while the name may be new, the concepts build on the regulatory foundation laid in 2019, which has rapidly gained traction as employers seek more personalized, cost-controlled alternatives to the traditional group health plan.

Key proposed changes include:

• Shortened notice period: The required employee advance notice period would shrink from 90 days to 60 days, easing an administrative friction point for employers rolling out an ICHRA plan.
• Pre-tax premiums for Exchange plans: The bill would allow employees to purchase health plans from the Exchange using pre-tax dollars—potentially increasing affordability and access without additional employer premium contributions.  
• Small business tax credits: Non-Applicable Large Employers (non-ALEs) could qualify for a two-year tax credit if they implement an ICHRA plan for the first time. The credit begins at $1,200 per enrolled employee per year in year one, and $600 per enrolled employee in year two. For small employers looking to exit the traditional group market, this is a powerful incentive. 

The proposed changes could mark a meaningful evolution for ICHRA. The shift toward personalization, coupled with enhanced tax credits for businesses and pre-tax payments for Exchange plans, could significantly accelerate adoption for businesses of all sizes—particularly in sectors where affordability, flexibility, and choice are critical.

HSA and FSA flexibility: More access, more impact

The bill also proposes a series of expansions and clarifications for Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs), which could significantly increase their usability for employees and strategic value for employers.

Highlights include: 

• Broader HSA eligibility: Bronze and catastrophic plans, on-site clinics, Medicare Part A, and some direct primary care models could become compatible with HSAs—clearing up long-standing gray areas and unlocking eligibility for more ICHRA participants.
• Grace period for setup: Employees could open an HSA up to 60 days after enrolling in a qualified high-deductible plan and still reimburse prior expenses—a practical fix that supports smoother ICHRA onboarding.
• Higher income-based contribution limits: The proposal includes increased HSA limits for individuals making less than $75,000 and households making less than $150,000—up to $8,600 for singles or $17,100 for families.
• Spousal HSA contributions and enhanced flexibility: When both spouses are enrolled in a family-qualified high-deductible plan (QHDHP), both may be permitted to make catch-up contributions to the same HSA—simplifying joint planning for retirement and medical expenses. On that note, a spouse having an FSA would no longer automatically disqualify the other from HSA eligibility (though clarification is still needed on whether the spouse’s FSA can reimburse employee medical expenses).
• FSA-to-HSA conversions: Unused FSA or HRA funds could potentially roll into an HSA (with certain coverage history requirements), removing a frustrating barrier for employees looking to consolidate savings.
• Fitness and wellness reimbursements: Up to $500/year for individuals or $1,000 for couples in gym or sports expenses could be HSA-eligible, encouraging preventive health spending. And, as a qualifying medical expense, this also means you could use HSA funds for some fitness and wellness expenses.

For employers using ICHRA, these changes enhance the model’s value: employees can stop “pre-buying” care via high-premium, low-deductible plans and instead build tax-free savings for the care they actually need—when they need it. And for employees, these changes may equip them to do more than choose plans that suit their health profiles and family needs. They may empower them to proactively plan for healthcare expenses—furthering the connection between healthcare benefits and financial well-being.

The full scope of the proposed legislation

The proposed ICHRA, HSA, and FSA reforms are part of a broad legislative package aiming to extend and expand key tax cuts established in 2017. Alongside employer-sponsored benefits reform, the bill includes a mix of tax, healthcare, and family-related measures purported to support economic growth and household financial flexibility.

While the healthcare-related portions—particularly those expanding ICHRA options and modernizing HSA/FSA rules—have generated interest across party lines, the full package brings together a varying set of priorities. 

As the debate continues, the fate of the full package remains uncertain. However, the focus on expanding individual choice, improving health savings options, and offering more flexible tax-advantaged benefits has positioned ICHRA and HSA/FSA provisions as promising components with potential for broader support.

So, what should brokers (and employers) do now?

While these proposals are not yet law, they offer a preview of where federal policy may be headed. For brokers and employers, this is a good time to reevaluate your current offerings and benefits model. 

Take a fresh look at how health benefits—plan design, funding structure, and overall approach—serve your clients, their workforce, and the bottom line. With ICHRA gaining traction, now is the time to assess whether a more flexible, cost-aligned model could better support your goals.

The bottom line

While it’s likely that changes will be made to the proposal before it reaches the President’s desk, one thing’s clear: the legislation signals a continued shift toward more portable, personalized, and tax-efficient benefits for employers and employees. That means more flexibility for employees and more opportunity—and incentive—for employers to break away from traditional models and explore a future-ready solution like ICHRA. 

For organizations offering or exploring ICHRAs, it’s a good time to get ahead of the curve. Curious how these changes could impact your benefits strategy? We can help—book a quick call with our team today.