ICHRA

Individual Coverage HRA (ICHRA) reporting

by Ali

The IRS has released drafts of 2020 IRS forms 1094-C and 1095-C which employers offering the Individual Coverage HRA (ICHRA) will be required to complete.  While we are still waiting for the IRS to release the official instructions for the forms here is what we know so far. 

 

At this time, it appears that only Applicable Large Employers (ALE’s) with 50 or more full time equivalent employees will be required to complete the 1095-C for their employees.

 

What you need for ICHRA reporting on 1095-C

 

In order to complete the form, the employer will need to gather the following information:

  • employee zip code of residence
  • who was offered ICH? (employee only, employee + spouse, employee + dependents)
  • Safe Harbor Used to calculate Affordability: employee residence zipcode or employer zip code
  • Is the ICHRA offering Affordable?
  • Non full-time employees offered ICHRA
  • Employee required contribution amount for excess premium 

 

ICHRA reporting 1095-c

 

ICHRA reporting 1095-c

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ICHRA reporting line by line for 1095-C

 

The information gathered will be used in the following Lines:

 

Line 14 - updated codes added for ICHRA

 

1L. Individual coverage health reimbursement arrangement (HRA) offered to you only with affordability determined by using employee’s primary residence location ZIP Code.

 

1M. Individual coverage HRA offered to you and dependent(s) (not spouse) with affordability determined by using employee’s primary residence location ZIP Code.

 

1N. Individual coverage HRA offered to you, spouse and dependent(s) with affordability determined by using employee’s primary residence location ZIP Code.

 

1O. Individual coverage HRA offered to you only using the employee’s primary employment site ZIP Code affordability safe harbor.

 

1P. Individual coverage HRA offered to you and dependent(s) (not spouse) using the employee’s primary employment site ZIP Code affordability safe harbor.

 

1Q. Individual coverage HRA offered to you, spouse and dependent(s) using the employee’s primary employment site ZIP Code affordability safe harbor.

 

1R. Individual coverage HRA that is NOT affordable offered to you; employee and spouse or dependent(s); or employee, spouse, and dependents.

 

1S. Individual coverage HRA offered to an individual who was not a full-time employee.

 

Line 15 - Employee required contribution for ICHRA is the excess of the monthly premium based on the employees applicable age for the applicable LCSP over the monthly ICHRA amount (annual ICHRA amount divided by 12)

 

Line 17 - applicable zip code employer used to determine affordability for ICHRA

 

Another change is the inclusion of Line 17 to provide monthly zip code information for those employees who were offered coverage through an individual coverage HRA. Depending on whether affordability of that coverage was determined based on the employee’s primary residence versus primary work location, the zip code corresponding to the employee’s primary residence or primary work location applies.

 

Employers may also be required to fill out form 1094-C however there is not enough instructions on the draft form at this time to determine how employers offering ICHRA will use this form. 

Stay tuned! We will update this article once the IRS releases the full instructions for 2020.

 

As always, message us on our website if you have any questions! We'd be happy to help. 

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Hi, I'm Ali! I wrote this blog because I love helping people decode confusing insurance jargon and understand the fine print. I'm a licensed health insurance professional and specialize in simplifying health insurance for individuals and small businesses. My QSEHRA articles have been featured regularly on Accounting Today, Accounting Web, HRWeb, and other industry publications. I'm also a member of Take Command Health's client success team and a full-time mom. Learn more about me and connect with me on our about us page. Thanks!