2023 ACA Reporting Requirements for ICHRA
It’s that time of year again. You got it, tax time! End-of-year reporting is at the top of employers’ to-do lists, especially those who offer a health reimbursement arrangement (HRA), like the individual coverage health reimbursement arrangement (ICHRA).
While this may not be what’s traditionally considered the most wonderful time of year, the team at Take Command is here to make tax time a breeze for your business. As your trusted HRA administrator, Take Command will ensure you have all the data and support you need to fulfill the Affordable Care Act (ACA) reporting requirements for ICHRA.
ACA and ICHRA Reporting 2022
When ICHRA came on the scene in early 2020, the IRS had to update reporting guidance to include these programs. This means as an industry, this is all still fairly new. So it’s completely understandable if this seems confusing. Feel confident knowing the experts at Take Command have your back; we’ll walk you through everything you need to know and make it as simple as possible.
Whether you’re new to HRAs, or a more seasoned HRA provider, this blog will help you understand everything you need to know about ACA reporting requirements for 2022. In addition, you can watch our ACA reporting and ICHRA webinar, which goes over these topics in-depth.
Want more? Here’s a recent webinar we did on ACA reporting and ICHRA!
You can also download the webinar slides.
ICHRA Reporting Requirements: What You Need To Know
Before we get into the details, let’s review the key terms necessary to understand ACA reporting requirements.
The IRS defines an applicable large employer (ALE) as a business with 50 or more employees. Do you need help figuring out if you’re an ALE or non-ALE? Check out this document for a complete checklist.
If your business offered an ICHRA in 2022, here’s what you need to do for your upcoming tax preparation to fulfill the ICHRA reporting requirements.
A common ICHRA FAQ among business owners is, “what forms do I need to report if I offered an ICHRA last year?”
Current ICHRA regulations require that you:
File a Form 1094-C and accompanying Forms 1095-C with the IRS, and
Provide a Form 1095-C to any employee who meets ICHRA eligibility, meaning they were full-time for at least one month during the calendar year.
Another ICHRA FAQ we often hear is, “how and when do I need to file these forms to comply with ICHRA regulations?”
For the 2022 reporting period, you will need to file your 2022 Form 1094-C and accompanying Forms 1095-C by:
February 28, 2023, if filing on paper (not recommended), or
March 31, 2023, if filing electronically.
Check out this post for more information about ICHRA reporting requirements and filing instructions.
ICHRA Reporting Requirements for Small Employers
If your business has fewer than 50 full-time employees, you’re considered a small business and must submit certain forms to the IRS to remain compliant. Here are the ICHRA reporting requirements for small businesses.
Submit Form 1094-B2 and Form 1095-B3 to the IRS
Form 1095-B provides information about the organization’s coverage to employees. You must submit Form 1095-B for every employee who had an ICHRA during the plan year.
Form 1094-B is a summary sheet that includes the total number of Form 1095-Bs submitted to the IRS.
Send employees Form 1095-B
Each form includes codes that tell your employees how you calculated their affordability. You must provide this form to all full-time employees, including those who were full-time for at least one month during the tax year.
Employers must provide this information to employees by January 31. These forms are due to the IRS by February 28 for paper filers and by March 31 if filing electronically.
ICHRA Reporting for Applicable Large Employers
If your business has more than 50 full-time employees, you’re considered a large employer and must meet the ACA’s employer mandate to provide employees with healthcare coverage. If you decide to offer an HRA rather than traditional group health insurance, you must demonstrate that the amount you’re reimbursing employees for through the HRA is enough to make the employee’s individual health coverage costs affordable.
What exactly does that mean? Your HRA reimbursement allowances must be enough to cover the lowest cost silver tier insurance plan on the ACA marketplace or state exchange and are no more than 9.21% of the employee’s household income for 2022.
Here are the ICHRA reporting requirements for large businesses.
Submit Form 1094-C4 to the IRS
This provides information about the coverage you offer to employees
You must include every full-time employee from the tax year and every part-time employee who was enrolled in your ICHRA
Send Form 1095-C5 to your employees
This includes codes that tell employees how you calculated affordability. You must provide this form to all employees that were full-time for at least one month
ICHRA Reporting for W-2 Employees
You don’t need to report your ICHRA benefits on your employees’ W-2s. The ACA requires employers to report the cost of employer-sponsored group health plans, but not ICHRA on Form W-2. However, if you offer other types of HRAs, like qualified small employer HRA (QSEHRA), you need to follow the W-2 reporting requirements for small employers. Here is our guide on how to do that.
Employees With ICHRA Must Have MEC To Get Tax Benefits
For your employees to get tax-free reimbursement from their ICHRA, they must have MEC as defined by the ACA. Those who don’t have MEC are required to pay income taxes on all reimbursements they receive.
Note: all reimbursements are typically on employee pay stubs.
ICHRA Reporting Requirements Under Section 6056
This applies to all ALEs:
Must offer MEC to 95% of all full-time employees and dependent children
Must offer minimum value affordable coverage to full-time employees
Or employer could be assessed by penalty A or penalty B (Code 4980H)
Separate penalties for late or incorrect filings
Must distribute and file IRS 1095-B and 1094-B forms
Which forms must ALEs complete?
IRS Form 1095-C
Must be provided to each full-time employee
Must be filed with the IRS (electronic or paper) along with transmittal
Transmittal Form 1094-C
Must be filed with the IRS (electronic or paper)
Must be filed by each ALE member or authoritative transmittal
ICHRA Reporting Requirements Under Section 6055
6055 Reporting applies to Insurers and Non-ALEs with self-insured coverage
Self-insured includes a “level-funded” or “partially self-insured” medical plan
Does not apply to small employers with fully-insured coverage
No employer mandate penalties, but could face penalties for incorrect or late returns
Must distribute and file IRS 1095-B and 1094-B forms
Take Command Answers All of Your ACA Reporting Requirements for ICHRA Questions
Are you more of a visual learner? Or do you wish someone would walk you through exactly what you need to know, step-by-step, with visuals? Well, then, you’re in the right place! Take Command experts recently hosted a webinar about ACA reporting requirements for ICHRA. You can watch the webinar replay here and view the slides here. And you can always reach out to our team for more information.
We encourage you to contact your accountant for more detailed tax information if you have more specific questions about tax reporting. Take Command provides all the information you need to fill out your fax forms.
