People are always talking about flexibility when it comes to CHOICE Arrangements (also known as ICHRA). But what does “flexibility” actually mean when it comes to this employer health benefit?
Group health is often expected to work within a rigid structure; one renewal cycle, limited selection of plans, and participation requirements. CHOICE Arrangements take a different approach by allowing employers more choices in how they structure their benefit.
Here’s how flexibility shows up in practice.
You Have More Control Over Your Contribution
Over the past few years, employers have been facing increasingly difficult group health renewals. In 2026, more than one-third of employers reported premium increases of 10% or more at their most recent renewal. Employers often have no control over those increases and have little room to negotiate. The choices are usually whether to absorb the additional cost, pass it on to employees, reduce benefits, or shop around.
CHOICE Arrangements work differently; instead of committing to a percentage of an ever-changing group plan premium, employers set a monthly contribution, giving them more control over their benefits budget year-over-year.
Individual market premiums increase too, and employers need to adjust their contributions over time to maintain affordability. But an increase in individual premiums doesn’t automatically translate into the same percentage increase in the employer’s benefits spend.
For example, a 75-person company could set its CHOICE contribution at 75% of the cost of a low-cost Gold plan, adjusted by age. Because individual premiums generally increase with age, a 28-year-old employee might receive a smaller monthly allowance than a 58-year-old employee while both receive the same 75% contribution toward the benchmark plan. The following year, the employer can review new rates and affordability requirements and decide how to adjust their contribution strategy.
No surprise renewal letters. No sticker shock. Just a benefits budget you have more control over.
2. No Minimum Participation Requirements
Group health usually comes with minimum participation requirements that can hold back smaller businesses from being able to participate. A CHOICE Arrangement has no participation requirements; you can offer it whether you have 5 eligible employees or 500.
CHOICE is particularly useful on this issue, because a company can start offering health benefits with a relatively small workforce and continue scaling the same benefits as it hires more employees.
Consider a 10-person startup where half the team already has coverage through a spouse or another source. It would be hard to meet a group carrier’s participation rates with that. CHOICE gives them an option where they can establish a health benefit for the remaining employees and let participation grow along with the company.
CHOICE is a benefit that scales with your workforce.
3. Employees Choose the Plan That Works for Them
When employers put group plans together, they typically choose the carrier and offer only one or two options. And somebody’s favorite doctor is going to be out-of-network with that option.
With a CHOICE Arrangement, employees shop for their own plans. A young, single employee might choose a lower-premium, higher-deductible plan. A family of five managing a chronic health condition will prioritize a richer plan with a broader provider network and lower out-of-pocket costs. Employees can compare the options available in their local network and choose based on what matters most to them.
For employers, giving your employees that much choice can sound overwhelming. “Do I really have time to help employees understand the differences between dozens of plans available in their market?”
That’s where a great CHOICE administrator comes in. Rather than putting the employer in the position of becoming an insurance expert, the right partner can provide employees with enrollment support, plan comparison tools, and guidance throughout the shopping process. Check out Benafica’s BEN360 platform shopping experience.
The employer sets the benefit. Employees choose the coverage.
4. Customize by Employee Class
Employee classes are perhaps the CHOICE Arrangement perk that gives employers the most flexibility in how they offer health benefits. Group health ain’t got nothing on this one.
Traditional group health plans require employers to offer consistent benefits to similarly situated employees. CHOICE gives employers another option: you can build your benefits strategy around 11 permitted employee classes, offering different contribution amounts or even different benefit approaches to different parts of your workforce.
The 11 employee classes are:
- Full-time employees
- Part-time employees
- Hourly employees
- Salaried employees
- Seasonal employees
- Temporary employees from staffing firms
- Employees covered by a collective bargaining agreement
- Employees still in a waiting period
- Non-resident aliens with no U.S.-based income
- Employees in the same geographic location
- Any combination of 2+ classes above
This can be a huge advantage for businesses with mixed or complex workforces, like:
- A restaurant with full-time managers and part-time servers
- A construction company with regular and seasonal workers
- A manufacturer with union and non-union employees
- A remote company with employees spread out across multiple states
An employer might decide to keep its existing group plan for one class of employees while offering a CHOICE arrangement to another. Or it could offer CHOICE across its workforce but vary eligibility and contributions between classes. Classes can also be combined to create a benefits structure that works for an employer’s more specific needs.
There are rules around how employee classes can be used, including minimum class-size requirements in certain situations. When employee classes are used correctly, they give employers significantly more control over how they design their benefits.
Different employees. Different needs. One benefits strategy built to handle both.
5. CHOICE Scales with Your Business
As we said before, a CHOICE arrangement works whether you have 5 employees or 500. But where it really shines is when your business starts growing beyond its original footprint.
If your business starts expanding into a new state or region with a traditional group plan, that can mean figuring out whether your existing carrier and network will work there. If it doesn’t, that means you have to find a new carrier and network. Before long, a growing company can find itself in the weeds of managing multiple different carriers, networks and plan options across locations.
CHOICE arrangements are already optimized around an employee’s local individual insurance market. Hire someone in another state? They shop the plans available where they live. Open a new location? You don’t have to find a group network that stretches into that market. Add employees mid-year? They can enroll in coverage when they become eligible.
This perk makes CHOICE particularly flexible for businesses that are small today but have plans to expand. Multi-state teams don’t require multi-state group plans or a patchwork of different plans for HR to manage. Employees choose from what’s available in their own local markets while the employer keeps things simple with administration.
New employees. New locations. New states. Same benefits strategy. Easy-peasy.
More Flexibility, Not More Work
CHOICE gives employers more control over how they offer health benefits—and Benafica makes it easier to put that flexibility to work. From contribution strategy and compliance to employee enrollment and ongoing administration, we’re here to help.
Learn more on our ICHRA/CHOICE page, or request a quote to see what it could look like for your business.