How the One Big Beautiful Bill Act Could Reshape Benefits and Insurance

The One Big Beautiful Bill Act (OBBBA) is a comprehensive reconciliation bill that encompasses budgetary provisions related to the border, defense, energy policy, spending cuts, the debt ceiling, taxes, and more. 

While it’s still working its way through Congress, the bill signals significant potential changes that could impact how employers structure benefits, how individuals access coverage, and how insurance products are taxed and delivered.

Here’s what employers need to know as of mid-June 2025 — and how to prepare for what may come next.

A New Era for ICHRAs

One of the bill’s most transformative elements is the codification and enhancement of Individual Coverage Health Reimbursement Arrangements (ICHRAs), rebranded in the bill as CHOICE arrangements (Custom Health Option and Individual Care Expense arrangements).

Key proposed changes include:

• Streamlined administrative requirements, including reducing the current 90-day notice period to 60 days.
• Pre-tax premium payments for Exchange-purchased individual plans — a shift that could reduce employee premium costs and employer payroll taxes.
• A two-year tax credit for small employers (under 50 employees) offering CHOICE arrangements.

These updates are intended to give employers greater flexibility while empowering employees with personalized healthcare choices. For cost-conscious employers and those struggling to attract and retain talent, CHOICE arrangements could be a powerful tool.

ACA and Medicaid: Potential Coverage Losses

On the other side of the ledger, the bill proposes significant reductions to Medicaid and Affordable Care Act (ACA) subsidies, which could increase the uninsured rate and affect workforce health and productivity.

The Congressional Budget Office (CBO) estimates the bill could result in 11 million people losing coverage due to Medicaid and ACA cuts and an additional 4 million losing coverage from expiring Obamacare subsidies.

This could lead to more employees turning to employer-sponsored coverage, increasing benefits plan enrollment and potential claims exposure — especially for organizations with a high number of low-wage workers.

Compliance Considerations and Administrative Shifts

Employers will also need to keep a close eye on proposed regulatory changes that could impact benefits administration and compliance obligations. The bill includes provisions that:

• Shorten notice periods for ICHRAs/CHOICE arrangements, requiring employers to adjust their communication timelines; and
• Create new verification requirements for exchange enrollment, which could impact the coordination of benefits with spouses or dependents.

Insurance Impacts: Emerging Pressures for Households

The bill may also influence personal insurance coverage through broader economic and policy shifts:

• Climate Change: As natural disasters become more frequent and severe, insurers are already tightening underwriting standards — and the bill’s broader impact on federal programs may accelerate that trend. Homeowners in wildfire zones, floodplains, and hurricane-prone regions may struggle to find affordable or any coverage at all.
• Inflation: Persistent inflation continues to drive up the cost of construction materials, vehicle parts, and labor. If the bill’s economic policies contribute to further inflationary pressure, homeowners and auto insurance premiums could rise significantly.
• Tax Cuts & Incentives: Reductions in public assistance programs, such as Medicaid and Supplemental Nutrition Assistance Program (SNAP), could have broader financial consequences for lower-income households. If individuals need to reallocate limited resources to healthcare or basic needs, personal insurance premiums may be one of the first spending categories to fall by the wayside — increasing the risk of coverage lapses.
• Tech-Driven Underwriting: Insurers are using more advanced data tools, which can improve pricing accuracy but also result in higher premiums or coverage denials for some consumers.

Employers offering voluntary coverage for personal lines should prepare for increased questions, more dynamic risk profiles, and the need for targeted financial wellness support.

Preparing for What’s Next

Although the bill is still moving through the legislative process, its provisions reflect emerging policy trends that center around personalization, portability, and proactive incentives for employers to offer more flexible benefits. 

A strategic partner can help employers assess their current benefits strategies, model financial impacts, and prepare for what’s ahead — whatever shape the final legislation takes. Connect with our team at CBIZ today to learn more about how the One Big Beautiful Bill Act may impact your organization.