House Bill Would Create ‘Options’

House Bill ‘Optimizing Participant Tax Incentives through Optional Noncash Selections’ (OPTIONS) Act

The spring flowers are blooming, and the House Democrats and Republicans are getting along (for this day, at least). On April 15, the federal OPTIONS Act was introduced in the House by Greg Steube and Suzan DelBene. The bill would amend the Internal Revenue Code to let employers offer a new kind of benefit option, allowing employees to direct certain employer contributions among multiple tax-favored benefits.

For HR and benefits teams, the biggest advantage is benefit design flexibility. The proposed menu of eligible options includes employer contributions to retirement arrangements, HSAs or HRAs, educational assistance programs under section 127, and potentially other employer-provided benefits that are already excluded from gross income.

If enacted, the bill could help employers tailor benefits to a more diverse workforce by allowing some employees to prioritize retirement savings, while others direct employer dollars toward health care expenses or student-loan-related educational assistance. The bill also applies nondiscrimination concepts similar to those used for cafeteria plans and includes reporting and recordkeeping provisions.

The Press Releases quotes American Retirement Association CEO Brian Graff stating “The OPTIONS Act is a smart, forward-looking solution that empowers employees to direct employer contributions where they need them most, whether that’s retirement savings, healthcare, or paying down student debt.”

The OPTIONS Act signals potential future flexibility in employer-sponsored benefits, and we will watch this bill’s path closely.

The regulatory landscape changes fast. Connect with our in-house ERISA attorneys and compliance team to protect your business today. Email [email protected] to talk to our team.