I 
118TH CONGRESS 
1ST SESSION H. R. 3799 
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 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
for health reimbursement arrangements integrated with 
individual health insurance coverage. 
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’’. 
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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 
paragraph: 
‘‘(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 treat-
ed as meeting the requirements of sections 
2711 and 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— 
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‘‘(i) which is an employer-provided 
group health plan funded solely by em-
ployer contributions to provide payments 
or reimbursements for medical care subject 
to a maximum fixed dollar amount for a 
period, 
‘‘(ii) under which such payments or 
reimbursements may only be made for 
medical care provided during periods dur-
ing 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 parts A and B of 
title XVIII of the Social Security Act 
or part C of such title, 
‘‘(iii) which meets the nondiscrimina-
tion requirements of subparagraph (C), 
‘‘(iv) which meets the substantiation 
requirements of subparagraph (D), and 
‘‘(v) which meets the notice require-
ments of subparagraph (E). 
‘‘(C) NONDISCRIMINATION.— 
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‘‘(i) IN
GENERAL.—An arrangement 
meets the requirements of this subpara-
graph if an employer offering such ar-
rangement to an employee within a speci-
fied class of employee— 
‘‘(I) offers such arrangement to 
all employees within such specified 
class on the same terms, and 
‘‘(II) does not offer any other 
group health plan to any employees 
within such specified class. 
‘‘(ii) 
SPECIFIED
CLASS
OF
EM-
PLOYEE.—For purposes of this subpara-
graph, any of the following may be des-
ignated as a specified class of employee: 
‘‘(I) Full-time employees. 
‘‘(II) Part-time employees. 
‘‘(III) Salaried employees. 
‘‘(IV) Non-salaried employees. 
‘‘(V) Employees whose primary 
site of employment is in the same rat-
ing area. 
‘‘(VI) Employees who are in-
cluded in a unit of employees covered 
under a collective bargaining agree-
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ment to which the employer is subject 
(determined 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 
insurance coverage, waiting period re-
quirement that satisfies the require-
ments 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)). 
‘‘(X) Such other classes of em-
ployees as the Secretary may des-
ignated. 
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 
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employees to which the arrangement is of-
fered for purposes of applying this sub-
paragraph. 
‘‘(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 of clause 
(ii), any determination of full-time, part- 
time, or seasonal employment status shall 
be made under rules similar to the rules of 
section 105(h) or 4980H, whichever the 
employer elects for the plan year. Such 
election shall apply with respect to all em-
ployees of the employer for the plan year. 
‘‘(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 
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which may be made under the terms of the 
arrangement 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 of the 
lowest maximum dollar amount with 
respect to such a participant deter-
mined without regard to age. 
‘‘(D) SUBSTANTIATION REQUIREMENTS.— 
An arrangement meets the requirements of this 
subparagraph if the arrangement has reason-
able procedures to substantiate— 
‘‘(i) that the participant is, or will be, 
enrolled in coverage described in subpara-
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 
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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 
remains so enrolled. 
‘‘(E) NOTICE.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (iii), an arrangement meets 
the requirements of this subparagraph if, 
under the arrangement, each employee eli-
gible to participate is, not later than 90 
days before the beginning of the plan year, 
given written notice of the employee’s 
rights and obligations under the arrange-
ment which— 
‘‘(I) is sufficiently accurate and 
comprehensive to appraise the em-
ployee of such rights and obligations, 
and 
‘‘(II) is written in a manner cal-
culated to be understood by the aver-
age employee eligible to participate. 
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‘‘(ii) NOTICE
REQUIREMENTS.—Such 
notice shall include such information as the 
Secretary may by regulation prescribe. 
‘‘(iii) NOTICE
DEADLINE
FOR
CER-
TAIN EMPLOYEES.—In the case of an em-
ployee— 
‘‘(I) who first becomes eligible to 
participate in the arrangement after 
the date notice is given with respect 
to the plan under clause (i) (deter-
mined 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 re-
quired under clause (i) is provided not 
later than the date the arrangement may 
take effect with respect to such em-
ployee.’’. 
(b) NO INFERENCE.—To the extent not inconsistent 
with the amendments made by this section— 
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(1) no inference shall be made from such 
amendments with respect to the rules prescribed in 
the Federal Register on June 20, 2019 (84 Fed. 
Reg. 28888), relating to health reimbursement ar-
rangements and other account-based group health 
plans, and 
(2) any reference to custom health option and 
individual care expense arrangements shall for pur-
poses of such rules be treated as including a ref-
erence to individual coverage health reimbursement 
arrangements. 
(c) EFFECTIVE DATE.—The amendments made by 
this subsection shall apply to plan years beginning after 
December 31, 2023. 
Æ 
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