ICHRA Reporting Part 1 of 3: Forms 1094 & 1095

<blog-icon-title>Introduction<blog-icon-title>

Welcome back to our compliance miniseries!

Now that we’re mastered ICHRA setup, documentation, and communication, it’s time to think about how we wrap it all up come year-end to report about a plan to the various regulators. The first reports we’ll discuss are IRS Forms 1094c and 1095c. 

<blog-icon-title>1095<blog-icon-title>

Form 1095 includes information for any employee who participated in the ICHRA plan during the tax year. It is sent both to the IRS and to employees, and includes details specific to each employee, including the benchmarks used for their affordability calculation. These include: 

• Employee age 
• Zip code (employee’s primary residence or, if you use the safe harbor, the primary site of employment)
• Employee contribution (based on the lowest-cost silver plan cost post-allowance)  
• Wage type used in the affordability calculation (W-2, rate of pay, or federal poverty line) 
• Terms of offer (whether the ICHRA coverage was considered affordable; whether affordability was based on the zip code for the employee’s primary residence or primary site of employment; and whether the offer was extended to the employee only or included the employee’s spouse and dependents). 

These details are coded into the form in 2 specific sections:

• The 1095-B: Sent to employees to inform them how the employer calculated affordability. This form goes to all employees who were full-time for at least one month of the year.
• The 1095-C: Sent to the IRS by Applicable Large Employers (ALEs) for every employee who was employed full-time in the previous year, and for every part-time employee who was enrolled in an ICHRA. 

<blog-icon-title>1094<blog-icon-title>

The 1094 is an aggregate of all of an employer’s 1095s and acts as a cover sheet for the employee-level forms. The 1094 provides information about the coverage employers offer to employees, including financial totals, and must include every full-time employee from the tax year and every part-time employee who was enrolled in the ICHRA. The 1094-B is for small employers who are not ALEs, while the 1094-C is for ALEs with more than 50 employees. 

<blog-icon-title>Deadlines<blog-icon-title>

The exact deadlines change yearly, but generally employees must receive their 1095 copy by the end of February, while the IRS forms must be submitted by the end of March if filing electronically (or February if filing by paper).

<blog-icon-title>Conclusion<blog-icon-title> 

The above is a general description of what needs to be reported… but the devil is in the details! Producing the data for the forms – particularly the affordability calculation – requires a smart technology platform to help you keep things organized. That’s what Zorro is here to do.