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

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.

A big change for this year is the new electronic filing requirement. Earlier this year, the IRS issued final regulations regarding electronic filing requirements beginning the calendar year of 2025. Now, businesses filing more than 10 returns of any sort (including W2, 1099, and 1095 forms) must file electronically as opposed to filing by mail.

This means virtually all employers will need to file electronically, even those who filed with paper forms in previous years. Importantly, there are several actions employers will need to take in order to successfully file electronically. 

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 a key term necessary to understand ACA reporting requirements: ALE (Applicable Large Employer).

The IRS defines an applicable large employer (ALE) as a business with 50 or more full time equivalent employees. Do you need help figuring out if you’re an ALE or non-ALE?  Here’s a link to the IRS page. We recommend working with your tax professional to determine your status.

A common ICHRA FAQ among business owners is, “what forms do I need to report if I offered an ICHRA last year?” The short answer is Forms 1094 and 1095. However there are different versions of the forms for ALEs and for small businesses. Keep reading for more explanation on the different forms.

Another ICHRA FAQ we often hear is, “how and when do I need to file these forms to comply with ICHRA regulations?” 

For the 2024 reporting period, you will need to file your Form 1094 and accompanying Forms 1095 by:

• February 28, 2025: Forms due to IRS if filing with paper forms. Most companies will NOT be eligible to file paper forms due to the new 10 document limit.
• March 3, 2025: Form 1095 is due to employees.
• March 31, 2025: E-filed forms are due to IRS. The new e-file threshold is 10 total forms, meaning virtually all companies will need to file electronically.

ICHRA Reporting Requirements for Small Employers

If your business has fewer than 50 full-time equivalent employees per the IRS guidelines, you’re considered a small business and must file certain forms to the IRS to remain compliant. Here are the ICHRA reporting requirements for small businesses. 

1. File Form 1094-B and Form 1095-B with the IRS
2. Send a Form 1095-B to any employee who participated in the ICHRA for at least one month during the plan year. 
   

Form 1095-B provides information about the organization's coverage to employees. You must submit Form 1095-B for every employee who participated in the 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.

Each form includes codes that tell your employees how you calculated their affordability. You must provide this form to all employees who participated in the ICHRA for at least one month during the plan year. 

Employers must provide this information to employees by March 3rd, 2025. These forms are due to the IRS by February 28th for paper filers and by March 31st if filing electronically. Note that the IRS’s new e-file threshold is 10 total forms, meaning virtually all companies will need to file electronically.

Check out this post for more information about ICHRA reporting requirements and filing instructions for small businesses. 

ICHRA Reporting for Applicable Large Employers

If your business has more than 50 full-time equivalent 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 9.02% of the employee's household income for 2025. 

Here are the ICHRA reporting requirements for large businesses. 

1. File Form 1094-C and accompanying Forms 1095-C with the IRS
2. Send Form 1095-C to any employee who is full-time for at least one month during the calendar year.

The forms 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

Check out this post for more information about ICHRA reporting requirements and filing instructions for ALEs. 

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

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

We're to help with all of your questions! We get that this can be tricky. Just simply chat with us on our website.

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.