High-income business owners in Florida usually choose among four structures: an ICHRA (now called a CHOICE Arrangement), a QSEHRA, a fully insured small group plan, or a level-funded plan. Which one fits depends on your entity type, how many employees you have, and whether you need to cover yourself. S-corp owners also need to handle premiums correctly to get the self-employed health insurance deduction.
Educational content only. This article explains general federal rules and is not individualized tax, legal, or investment advice. Tax outcomes depend on your full situation, so consult your CPA or tax advisor before acting.
Key takeaways
- Same ICHRA, new name: CMS and the SBA rebranded the ICHRA as a CHOICE Arrangement on Sept. 3, 2026. The rules are unchanged.
- Owners usually can’t reimburse themselves: CHOICE Arrangements and QSEHRAs are for employees. Sole proprietors and more-than-2% S-corp shareholders are generally treated as self-employed.
- S-corp premiums: included in the owner’s W-2 Box 1, generally excluded from Social Security and Medicare wages, then deducted on the owner’s return.
- Florida small group 2027: two carriers are leaving, and the remaining 8 average +11.4%.
ICHRA, now called a CHOICE Arrangement
An ICHRA (now called a CHOICE Arrangement) lets an employer of any size reimburse employees tax-free for individual health insurance premiums and, if the plan allows, other qualified expenses, up to an amount the employer sets. Employers can generally set different allowances for different classes of employees. According to HealthCare.gov, for 2027, an offer is “affordable” if the employee’s cost for the lowest-cost Silver plan, after the reimbursement, is less than 10.22% of household income. Employees with an affordable offer can’t get a premium tax credit. Oscar is moving its own Florida employees to CHOICE Arrangements for 2027, a sign of how mainstream the model has become.
Employees choose their own Florida individual plan, such as Florida Blue, Ambetter from Sunshine Health, Oscar, UnitedHealthcare, AvMed, or 22 Health. Employees who want to pay any remaining premium pre-tax through payroll need to buy off-exchange; see our comparison of on-exchange vs. off-exchange plans. Cigna and Molina are leaving Florida’s individual market, so they aren’t 2027 options for employees.
QSEHRA: the small-employer version
A QSEHRA is for employers with fewer than 50 full-time and full-time-equivalent employees that don’t offer a group health plan. It must be funded only by the employer, and employees must show proof of minimum essential coverage. For 2026 the maximum is $6,450 for self-only coverage and $13,100 for family coverage. A QSEHRA has a hard cap and less flexibility in setting employee classes than a CHOICE Arrangement, but it’s simple to administer for a small team.
Small group and level-funded plans
A fully insured small group plan is the traditional option. It’s ACA-compliant, and owners can usually enroll alongside employees. That matters when you want one plan with a strong network, such as access to AdventHealth, Orlando Health, Moffitt, or Mayo Clinic Jacksonville. Florida’s 2027 small group market is tighter: Florida Health Care Plan and National Health Insurance Co are leaving, and the remaining 8 carriers average +11.4% (range 8.4% to 15.5%). Shop before your renewal, as we explain in our 2027 Florida rate increase guide.
A level-funded plan is a self-funded arrangement with stop-loss coverage and a fixed monthly cost. A healthy group may get a refund or credit if claims come in low. Pricing usually depends on the group’s health, so a group with high claims may get a higher quote. These plans follow different rules than fully insured small group plans, so review the terms carefully.
S-corp owners: how premiums should flow
Under IRS guidance on S corporation medical insurance, health insurance premiums paid for a more-than-2% shareholder-employee are deductible by the S corporation and reported as wages on the shareholder’s Form W-2:
- Included in Box 1 (wages) and subject to income tax withholding.
- Generally excluded from Boxes 3 and 5 (Social Security and Medicare wages) when paid under a plan for all employees or a class of employees.
- Self-employed health insurance deduction: the shareholder may take this above-the-line deduction if the S corporation established the coverage, either by paying the premiums or reimbursing them.
- Exception: the deduction isn’t available for any month the owner or spouse is eligible for a subsidized employer plan, such as a spouse’s job-based coverage.
If the owner pays premiums personally and the S-corp never reimburses them or reports them on the W-2, the deduction can be lost. IRS Publication 15-B also says a 2% shareholder is treated like a partner, not an employee, for health fringe benefits. As a result, the owner generally can’t take part in the company’s CHOICE Arrangement or QSEHRA as an employee. Your CPA should confirm your setup before year-end payroll. For limits on the deduction, see how much you can deduct for self-employed health insurance.
Sole proprietors and single-member LLCs
A sole proprietor can’t use a CHOICE Arrangement or QSEHRA to cover themselves. Instead, they generally buy an individual ACA plan (on- or off-exchange) and may claim the self-employed health insurance deduction, subject to IRS limits. If you have W-2 employees, you can still offer them a CHOICE Arrangement or QSEHRA. Some healthy owners also look at medically underwritten private plans. These may exclude pre-existing conditions and lack ACA protections, so read the terms closely.
Decision table
| Option | Best fit | Owner covered? | Key Florida 2027 note |
|---|---|---|---|
| CHOICE Arrangement (ICHRA) | Any size; dispersed or varied workforce; budget control | Not for self-employed owners | Employees choose from Florida Blue, Ambetter, Oscar, UHC, AvMed, 22 Health |
| QSEHRA | Under 50 employees, no group plan, simple setup | Not for self-employed owners | 2026 caps $6,450 / $13,100 |
| Fully insured small group | Owner wants to be on the same plan as staff; broad network | Generally yes | Remaining 8 carriers average +11.4% |
| Level-funded | Healthy groups that want potential refunds | Generally yes | Group-health-based pricing; review stop-loss terms |
| Individual plan plus SEHI deduction | Sole proprietors; S-corp owner with no staff | Yes (S-corp must report premiums on W-2) | No subsidy above 400% FPL; rates average +15.3% |
Frequently Asked Questions
Can a sole proprietor use an ICHRA for their own coverage?
No. HealthCare.gov says CHOICE Arrangements (formerly ICHRAs) are only for employees, not self-employed individuals, and the employer needs at least one employee who isn’t an owner or an owner’s spouse. Sole proprietors generally buy an individual plan and may qualify for the self-employed health insurance deduction.
How are S-corp owner health insurance premiums taxed?
For a more-than-2% shareholder, premiums paid or reimbursed by the S corporation are included in W-2 Box 1 wages but generally not in Boxes 3 and 5 (Social Security and Medicare wages). The owner may then claim the self-employed health insurance deduction. Confirm the setup with your CPA.
What is a CHOICE Arrangement?
It’s the new name CMS and the SBA gave the individual coverage HRA (ICHRA) in September 2026. The rules didn’t change: the employer reimburses employees tax-free for individual health insurance and qualified expenses up to a set amount.
How much are Florida small group rates rising for 2027?
Florida Health Care Plan and National Health Insurance Co are leaving the small group market. The remaining 8 carriers average +11.4%, with a range of 8.4% to 15.5%.
Choose the right structure for 2027
We’ll quote CHOICE Arrangements, QSEHRAs, small group, and level-funded options side by side for your business in DeLand, Orlando, Tampa, Jacksonville, or anywhere in Florida. Michael McAllister, owner of Choice Health Insurance Brokers in DeLand, is a licensed health insurance broker (NPN 18229135) with 10 years in business. He is appointed with 200 carriers and quotes on- and off-exchange, public and private plans. Call or text 321-230-9536 or visit choice.healthcare and bring your CPA into the conversation for the tax side.