ACA reporting for the 2021 tax year may seem far away right now, however, the IRS has introduced important new information for mandated reporters. This may affect your organization’s reporting requirements if you offer your employees an ICHRA.
The IRS released this new draft over the summer, remember, drafts should never be filed with the IRS in an official capacity. This draft is, however, a helpful guide for what Applicable Large Employers and other mandated ACA filers can expect in the upcoming tax year.
These are the key takeaways from the IRS draft of Form 1095-C for the 2021 tax year.
What are the main changes to Form 1095-C?
The main changes to the Form 1095-C for the 2021 tax year are centered around Line 14, Offer of Coverage. Line 14 of the Form 1095-C is where filers should indicate a code from Series 1. These codes are used to describe the status of the offer of coverage that the employer made to their employees.
For example, Code 1B is used to indicate that an offer of coverage was made to the employee but not their spouse or dependents. Last year, codes line 1L-1S were added in response to the inclusion of ICHRAs.
Code 1T represents the Individual coverage HRA offered to the employee and spouse (no dependents) and affordability was determined using the employee’s primary residence location ZIP code.
Code 1U represents the Individual coverage HRA offered to the employee and spouse (no dependents) and affordability was determined using employee’s primary employment site ZIP code affordability safe harbor.
To see the complete draft of Form 1095-C, click here.
Some background on the ICHRA
An ICHRA is an Individual Coverage Health Reimbursement Arrangement. This is a type of HRA that employers can offer as an alternative to a traditional group health insurance plan. With an ICHRA, employers can provide reimbursements to their employees to use towards the costs of their monthly health insurance premiums and other costs.
With this type of plan, the employee chooses their own health insurance plan. The employer selects the amount which they will contribute to their employees, but they must use the IRS guidelines to ensure that this qualifies as “affordable” for each employee.
To learn more about ICHRAs and affordability check out this article.
Let ACAwise handle your ICHRA Reporting
Navigating ACA reporting is difficult, especially when you are offering your employees an ICHRA. As this is the newest type of plan to be included in ACA reporting, there are more frequent updates and changes.
ACAwise offers a complete solution for your ACA reporting. Simply provide your ICHRA and employee data, and ACAwise takes care of the rest! Our team will upload your data conveniently, run data validations, generate your Forms 1095-C, and transmit them to the IRS pending your approval.