ICHRA - An Overview and
Reporting Requirements on
Express ACA Reporting
ICHRA - An overview
ICHRA (The Individual Coverage Health Reimbursement Arrangement) is an employer-sponsored reimbursement plan, which enables eligible employees to purchase their individual health insurance plan from the marketplace and in turn, get reimbursed from the employer for valid health services. The maximum reimbursement can be up to their allowance amount to help them cover a portion of their medical costs and/or premiums. These new regulations were introduced in 2020 and these plans are now emerging among employers.
The eligibility varies according to the employee classes listed below. It can be a different allowance amount for different classes of employees, including:
- Full-Time employees
- Part-time employees
- Seasonal employees
- Salaried employees
- Non-salaried employees
- Hourly employees
- Temporary employees who are working for a staffing firm
- Employees covered by a collective bargaining agreement
- Employees those in a waiting period
- NRI employees who work abroad
- Employees from different locations, depending on
rating areas - A blend of two or more of the above
Click here to learn more about the ICHRA and its affordability calculation.
ICHRA Affordability
ACA employer mandate says any Applicable Large Employers (ALE) reimbursing for the ICHRA plan should be affordable for each employee to avoid huge penalties from the IRS.
Based on the federal poverty line percentage, the IRS has set the ICHRA affordability percentage for the 2022 tax year as 9.61%.
Click here to calculate the ICHRA affordability.
ICHRA Reporting Requirements
As per the ACA reporting requirements, the reporting of ICHRA Information to the IRS and furnishing the copies to employees must be done by the employer. An employer is fully liable to carry out this process.
The IRS requests employers to report the ICHRA information on ACA Form 1095-B / 1095-C.
In order to determine the ICHRA plans information and to ensure the affordability for employees, the IRS has added new lines & codes to the Form 1095-B/C.
Reporting ICHRA on Form 1095-C
To gather ICHRA information from the ALE, the IRS added a few lines and codes on Form 1095-C
- Employee’s age on January 1
- Plan Start month
- Zip code by month (Line 17)
- There are now eight new codes (1L - 1S) in Line 14 to report the method they used to determine the affordability of ICHRA Coverage.
Click here to know more about the 2021 ACA Reporting Requirements.
Reporting ICHRA on Form 1095-B
Employers offering an ICHRA must report enrollment on line 8 of
Form 1095-B
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