14 Sep Individual Coverage Health Reimbursement Arrangements (ICHRAs) Requirements
Although ICHRAs may not be a traditional way of providing benefits to employees, ICHRAs are considered minimum essential coverage, and ICHRAs are subject to the Internal Revenue Service (IRS) reporting requirements authorized under the Affordable Care Act (ACA). Employers who offer an ICHRA must submit annual reporting forms to the IRS for the 2021 calendar year as well as in future years.
Small employers, those with fewer than 50 full-time equivalent employees, must submit Form 1095-B for every employee who had coverage under the ICHRA in 2020. Form 1095-B lets the IRS know which employees (and dependents of the employee) were enrolled in minimum essential coverage in 2020. It also helps the IRS validate the eligibility for subsidized coverage on the Health Insurance Marketplace since enrollment in an ICHRA disqualifies an employee from receiving subsidies. Small employers also must submit one Form 1094-B on behalf of the organization.
Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs), which work very similar to ICHRAs but are only available to employers with fewer than 50 full-time equivalent employees, are not subject to the ACA reporting requirements. QSEHRAs first became an option for small employers to offer in 2017. QSEHRAs were signed into law as part of the 21st Century Cures Act and by definition are not considered minimum essential coverage. As a result, QSEHRAs escape the ACA reporting requirements.
Original content by clergyfinancial.com. This information is provided with the understanding that Payroll Partners is not rendering legal, human resources, or other professional advice or service. Professional advice on specific issues should be sought from a lawyer, HR consultant or other professional.