IB 
Union Calendar No. 83 
118TH CONGRESS 
1ST SESSION H. R. 3799 
[Report No. 118–107] 
To amend the Internal Revenue Code of 1986 to provide for health reimburse-
ment arrangements integrated with individual health insurance coverage. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 5, 2023 
Mr. HERN introduced the following bill; which was referred to the Committee 
on Ways and Means 
JUNE 12, 2023 
Additional sponsor: Ms. MALLIOTAKIS 
JUNE 12, 2023 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on June 5, 2023] 
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A BILL 
To amend the Internal Revenue Code of 1986 to provide 
for health reimbursement arrangements integrated with 
individual health insurance coverage. 
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Custom Health Option 
and Individual Care Expense Arrangement Act’’ or the 
‘‘CHOICE Arrangement Act’’. 
SEC. 2. TREATMENT OF HEALTH REIMBURSEMENT AR-
RANGEMENTS 
INTEGRATED 
WITH 
INDI-
VIDUAL MARKET COVERAGE. 
(a) IN GENERAL.—Section 9815(b) of the Internal 
Revenue Code of 1986 is amended— 
(1) by striking ‘‘EXCEPTION.—Notwithstanding 
subsection (a)’’ and inserting the following: ‘‘EXCEP-
TIONS.— 
‘‘(1) SELF-INSURED
GROUP
HEALTH
PLANS.— 
Notwithstanding subsection (a)’’, and 
(2) by adding at the end the following new para-
graph: 
‘‘(2) CUSTOM HEALTH OPTION AND INDIVIDUAL 
CARE EXPENSE ARRANGEMENTS.— 
‘‘(A) IN
GENERAL.—For purposes of this 
subchapter, a custom health option and indi-
vidual care expense arrangement shall be treated 
as meeting the requirements of section 2711 and 
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2713 of title XXVII of the Public Health Service 
Act. 
‘‘(B) CUSTOM HEALTH OPTION AND INDI-
VIDUAL
CARE
EXPENSE
ARRANGEMENTS
DE-
FINED.—For purposes of this section, the term 
‘custom health option and individual care ex-
pense arrangement’ means a health reimburse-
ment arrangement— 
‘‘(i) which is an employer-provided 
group health plan funded solely by employer 
contributions to provide payments or reim-
bursements for medical care subject to a 
maximum fixed dollar amount for a period, 
‘‘(ii) under which such payments or re-
imbursements may only be made for med-
ical care provided during periods during 
which the individual is covered— 
‘‘(I) under individual health in-
surance coverage (other than coverage 
that consists solely of excepted bene-
fits), or 
‘‘(II) under part A and B of title 
XVIII of the Social Security Act or 
part C of such title, 
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‘‘(IV) Non-salaried employees. 
‘‘(V) Employees whose primary 
site of employment is in the same rat-
ing area. 
‘‘(VI) Employees who are included 
in a unit of employees covered under a 
collective 
bargaining 
agreement 
to 
which the employer is subject (deter-
mined under rules similar to the rules 
of section 105(h)). 
‘‘(VII) Employees who have not 
met a group health plan, or health in-
surance issuer offering group health in-
surance coverage, waiting period re-
quirement that satisfies the of section 
2708 of the Public Health Service Act. 
‘‘(VIII) Seasonal employees. 
‘‘(IX) Employees who are non-
resident aliens and who receive no 
earned income (within the meaning of 
section 911(d)(2)) from the employer 
which constitutes income from sources 
within the United States (within the 
meaning of section 861(a)(3)). 
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‘‘(X) Such other classes of employ-
ees as the Secretary may designate. 
An employer may designate (in such man-
ner as is prescribed by the Secretary) two or 
more of the classes described in the pre-
ceding subclauses as the specified class of 
employees to which the arrangement is of-
fered for purposes of applying this subpara-
graph. 
‘‘(iii) 
SPECIAL
RULE
FOR
NEW 
HIRES.—An employer may designate pro-
spectively so much of a specified class of 
employees as are hired after a date set by 
the employer. Such subclass of employees 
shall be treated as the specified class for 
purposes of applying clause (i). 
‘‘(iv) RULES FOR DETERMINING TYPE 
OF
EMPLOYEE.—For purposes for clause 
(ii), any determination of full-time, part- 
time, or seasonal employment status shall be 
made under rules similar to the rules of sec-
tion 105(h) or 4980H, whichever the em-
ployer elects for the plan year. Such election 
shall apply with respect to all employees of 
the employer for the plan year. 
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‘‘(v) 
PERMITTED
VARIATION.—For 
purposes of clause (i)(I), an arrangement 
shall not fail to be treated as provided on 
the same terms within a specified class 
merely because the maximum dollar amount 
of payments and reimbursements which 
may be made under the terms of the ar-
rangement for the year with respect to each 
employee within such class— 
‘‘(I) increases as additional de-
pendents of the employee are covered 
under the arrangement, and 
‘‘(II) increases with respect to a 
participant as the age of the partici-
pant increases, but not in excess of an 
amount equal to 300 percent the lowest 
maximum dollar amount with respect 
to such a participant determined with-
out regard to age. 
‘‘(D) SUBSTANTIATION
REQUIREMENTS.— 
An arrangement meets the requirements of this 
subparagraph if the arrangement has reasonable 
procedures to substantiate— 
‘‘(i) that the participant is, or will be, 
enrolled in coverage described in subpara-
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graph (B)(ii) as of the beginning of the 
plan year of the arrangement (or as of the 
beginning of coverage under the arrange-
ment in the case of an employee who first 
becomes eligible to participate in the ar-
rangement after the date notice is given 
with respect to the plan under subpara-
graph (E) (determined without regard to 
clause (iii) thereof), and 
‘‘(ii) any requests made for payment 
or reimbursement of medical care under the 
arrangement and that the participant re-
mains so enrolled. 
‘‘(E) NOTICE.— 
‘‘(i) IN GENERAL.—Except as provided 
in clause (iii), an arrangement meets the 
requirements of this subparagraph if, under 
the arrangement, each employee eligible to 
participate is, not later than 90 days before 
the beginning of the plan year, given writ-
ten notice of the employee’s rights and obli-
gations under the arrangement which— 
‘‘(I) is sufficiently accurate and 
comprehensive to appraise the em-
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ployee of such rights and obligations, 
and 
‘‘(II) is written in a manner cal-
culated to be understood by the average 
employee eligible to participate. 
‘‘(ii) NOTICE
REQUIREMENTS.—Such 
notice shall include such information as the 
Secretary may by regulation prescribe. 
‘‘(iii) NOTICE DEADLINE FOR CERTAIN 
EMPLOYEES.—In the case of an employee— 
‘‘(I) who first becomes eligible to 
participate in the arrangement after 
the date notice is given with respect to 
the plan under clause (i) (determined 
without regard to this clause), or 
‘‘(II) whose employer is first es-
tablished fewer than 120 days before 
the beginning of the first plan year of 
the arrangement, 
the requirements of this subparagraph shall 
be treated as met if the notice required 
under clause (i) is provided not later than 
the date the arrangement may take effect 
with respect to such employee.’’. 
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(b) NO INFERENCE.—To the extent not inconsistent 
with the amendments made by this section— 
(1) no inference shall be made from such amend-
ments with respect to the rules prescribed in the Fed-
eral Register on June 20, 2019, (84 Fed. Reg. 28888) 
relating to health reimbursement arrangements and 
other account-based group health plans, and 
(2) any reference to custom health option and in-
dividual care expense arrangements shall for purposes 
of such rules be treated as including a reference to in-
dividual coverage health reimbursement arrange-
ments. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to plan years beginning after December 
31, 2023. 
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Union Calendar No. 83 
118TH CONGRESS 
1ST SESSION 
H. R. 3799 
[Report No. 118–107] 
A BILL 
To amend the Internal Revenue Code of 1986 to 
provide for health reimbursement arrangements 
integrated with individual health insurance cov-
erage. 
JUNE 12, 2023 
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union, 
and ordered to be printed 
VerDate Sep 11 2014 
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