HRA Council Report 2026: What CHOICE Arrangement (aka ICHRA) Growth Means for Your Business

Key Takeaways

• More than 500,000 employees were covered by CHOICE Arrangement (aka ICHRA) at the start of 2026, spread across more than 20,000 U.S. businesses now offering the benefit, according to the HRA Council’s newly released Volume 5 growth report.
• Adoption among Applicable Large Employers (ALEs) more than doubled year over year, making large employers the report’s fastest-growing segment this year.
• More than two-thirds of small businesses offering CHOICE Arrangement in 2026 had no health coverage at all beforehand, so for most of these businesses, CHOICE Arrangement is the first employee benefit they’ve ever offered.
• Large employers validating CHOICE Arrangement at scale is a useful data point if you’re a small business or franchise still weighing whether it fits your team, even though the right answer still depends on your specific situation.
• CHOICE Arrangement enrollees skew younger than typical ACA marketplace enrollees, a trend the report ties to a stronger, more stable individual-market risk pool.

What the HRA Council Report Found

A Custom Health Option and Individual Care Expense (CHOICE) Arrangement, formerly ICHRA, lets an employer set a fixed monthly budget instead of buying one group health plan for the whole team, with each employee using that budget to choose the individual health plan that fits them best. That model has been scaling fast: according to the HRA Council’s newly released 2026 report, now in its fifth year of tracking the market, CHOICE Arrangement enrollment doubled year over year and passed 500,000 employees at the start of 2026. More than 20,000 U.S. businesses now offer CHOICE Arrangement or a related arrangement called QSEHRA, a similar defined-contribution benefit built for businesses with fewer than 50 employees.

The bigger shift from the past few years is in who is adopting CHOICE Arrangement. Growth among Applicable Large Employers, businesses large enough to face ACA employer reporting requirements, more than doubled year over year, outpacing every other employer segment the report tracked. “CHOICE Arrangement is a proven solution for employers seeking to provide affordable health coverage and employees who want to choose the quality insurance plan that works best for them,” HRA Council Executive Director Robin Paoli said in the announcement.

What This Means for You

If you’re a small business owner, franchise operator, or HR lead who has put off a serious look at CHOICE Arrangement, this year’s numbers answer two questions at once. 

• The first is whether CHOICE Arrangement is proven at scale, or still mostly a small-business workaround: large employers, the ones with dedicated benefits teams and full access to every alternative on the market, chose it anyway, and adopted it faster than any other segment. 
• The second is whether it’s realistic to offer at your size at all: more than two-thirds of small businesses that added CHOICE Arrangement in 2026 had no group health plan or other coverage in place before, so for most of them, CHOICE Arrangement was the first employee benefit they’d ever offered.

None of this makes CHOICE Arrangement automatically right for your business. A group health plan is still the better fit for plenty of teams, and that call should come from your workforce and budget. Between the large-employer validation and the small-business access numbers, you’re no longer weighing something that hasn’t been tested at scale.

Why Large Employers Are Treating CHOICE Arrangement as a Permanent Strategy

CHOICE Arrangement built its early reputation as a small-business workaround, a way to offer something when a traditional group plan was out of reach. The 2026 data shows large employers treating it as a deliberate, permanent piece of their benefits strategy, adopted on their own terms rather than forced by a bad renewal. Their workforces are also, on average, experienced health care consumers already used to annual enrollment, preventive care, and wellness programs, so the defined-contribution structure feels familiar once they adopt it.

That shift tracks with what’s happening across large-employer benefits more broadly. In the span of a few weeks this August, Disney restricted spousal health coverage for employees whose spouse has coverage of their own, Bloomberg began requiring employee premium contributions for the first time in its history, and Starbucks dropped coverage for GLP-1 weight-loss drugs. Those moves land as many sources predict that this year will be the fourth straight year of near-double-digit percentage price increases for healthcare coverage.

Cutting coverage is one response to that pressure. Dropping group coverage in favor of CHOICE Arrangement is another, and it’s the one that gives an employer a lever with a predictable price tag attached: the employer sets the budget, and cost growth from year to year is a known number rather than a renewal surprise.

What It Means for the ACA Marketplace and Risk Pool

The report also points to a side effect worth knowing about, even if it doesn’t change your own decision. CHOICE Arrangement participants skew younger than the typical ACA marketplace enrollee and disproportionately choose Silver and Gold plans, both of which strengthen the individual market’s risk pool at a moment when it’s already absorbing the effects of expired enhanced premium tax credits. That effect compounds as more large employers move to CHOICE Arrangement, since each new group brings its own concentration of younger, actively enrolling employees into the marketplace at once.

Getting Started

Deciding between a group health plan, CHOICE Arrangement, and a program like CoreChoice comes down to your team’s size, budget, and how much variation exists in what your employees need. Decisely‘s licensed, US-based benefits team has helped thousands of small businesses and franchises work through exactly this decision, so the recommendation you get starts from your situation instead of a single product a broker is trying to move.

Reach out to Decisely to talk through whether this year’s CHOICE Arrangement growth changes the calculus for your business, or whether another option still makes more sense for your team.