Please Note:
The filing deadlines for IRS Forms have been extended! Correct dates as of Dec. 3, 2021 are reflected in this document. For details, visit this page at irs.gov.
Blog Contents:
ACA Filing Requirement for ICHRAs: IRS Form 1094 and IRS Form 1095
The Affordable Care Act (ACA) requires that all companies that sponsored an ICHRA (Individual Coverage Health Reimbursement Arrangement) during the past year to file tax forms 1094 and 1095 with the IRS each year the ICHRA is offered. They must also make this information available to persons covered under that ICHRA.
In general, these tax forms show the health coverage that a company offered and enrollment status for each employee (Form 1095) and the company as a whole (Form 1094). The IRS (Internal Revenue Service) then uses this information to determine the eligibility of employees for Premium Tax Credits.
ACA Filing Requirements for Applicable Large Employers (ALEs): Form 1094-C & Form 1095-C
ALEs need to file Forms 1094-C (“Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns”) and 1095-C (“Employer-Provided Health Insurance Offer and Coverage”) with the IRS.
An employer is considered an Applicable Large Employer when they had 50 or more full-time employees at any time during the year. [Find more information on determining if a company is an ALE on irs.gov]
An ALE must satisfy the “employer mandate” regarding employee health coverage as outlined in the ACA or face penalties. There are two requirements, (1) offer enough full-time employees’ health coverage (the requirement is about 95%), and (2) offer coverage that is affordable.
An ICHRA is considered affordable if the monthly premium for the lowest-cost silver plan for self-coverage only (on the exchange in the employee’s primary site of employment), minus the monthly amount made available to the employee under the ICHRA (not including any increased amount made available under the ICHRA based on the number of covered dependents), is less than 9.83% of 1/12 of the employee’s annual household income. This percentage rate applies in 2021 and is indexed yearly.
The ICHRA affordability equation in a graphical format is:
Employers will have to determine the affordability of their ICHRA before filling out the 1095-C form.
They will also have to enter a code that reflects the coverage offered to the employee and how affordability was determined. If an ICHRA was offered, one of the following codes will have to be used for each employee:
- 1L. ICHRA offered to the employee only with affordability determined using the employee’s primary residence ZIP code.
- 1M. ICHRA offered to the employee and dependent(s) (not spouse) with affordability determined using the employee’s primary residence ZIP code.
- 1N. ICHRA offered to the employee, spouse, and dependent(s) with affordability determined using the employee’s primary residence ZIP code.
- 1O. ICHRA offered to the employee only using the employee’s primary employment site ZIP code affordability safe harbor.
- 1P. ICHRA offered to the employee and dependent(s) (not spouse) using the employee’s primary employment site ZIP code affordability safe harbor.
- 1Q. ICHRA offered to the employee, spouse, and dependent(s) using the employee’s primary employment site ZIP code affordability safe harbor.
- 1R. ICHRA that is NOT affordable offered to the employee; employee and spouse or dependent(s); or employee, spouse, and dependents.
- 1S. ICHRA offered to an individual who was not a full-time employee.
- 1T. ICHRA offered to employee and spouse (no dependents) with affordability determined using the employee’s primary residence ZIP code.
- 1U. ICHRA offered to employee and spouse (no dependents) using the employee’s primary employment site ZIP code affordability safe harbor.
The employer will have to create a Form 1095-C [including Part III regarding the self-insured plan (the ICHRA)] for each employee that worked at the company for at least one month that year. It must show the coverage information specific to that employee and family members. Then, the employer must send a copy to each employee and to the IRS.
Deadlines
The deadlines for the 1094-C and 1095-C forms are:
- For employees: each employee must be sent a copy via first class mail to arrive by Mar. 2, 2022
- For the IRS: when filing electronically, Mar. 31, 2022(deadline is earlier when submitting via paper)
Non-Applicable Large Employers (Non-ALEs): Form 1094-B & Form 1095-B
For its ICHRA, a small employer files using Form 1094-B (“Transmittal of Health Coverage Information Returns”) and 1095-B (“Health Coverage”).
It is important to note that even small employers that are not ALEs must also file. There is no exception to the ACA annual reporting requirements for a small employer. All providers of minimum essential coverage (MEC) to an individual during a calendar year must file an annual report on Form 1094/1095-B. An HRA, including an ICHRA, is a self-insured group health plan that is MEC. An employer that sponsors an ICHRA is a “provider” and must file.
Completing the 1094/1095-B Forms is not as involved as the 1094/1095-C Forms but still requires collecting information about the employer, the plan, and the persons covered under the plan.
Deadlines
The deadlines for the 1094-B and 1095-B forms are:
- For employees: each employee must be sent a copy via first class mail to arrive by Mar. 2, 2022
- For the IRS: when filing electronically, Mar. 31, 2022 (deadline is earlier when submitting via paper)
ERISA Filing Requirement for ICHRAs: Department of Labor Form 5500
Form 5500 is part of ERISA’s overall reporting and disclosure framework. The required information is collected to assure that employee benefit plans are operated and managed in accordance with certain prescribed standards. It is also used so that participants and beneficiaries, as well as regulators, are provided, or have access to, sufficient information to protect the rights and benefits of participants and beneficiaries under employee benefit plans.
Annual Filing Requirements
Under the ERISA, a Form 5500 is required for any welfare benefit plan (including ICHRA plans). However, there is an exception called the “small plan exception” to the filing requirement for plans years in which:
- There are less than 100 participants on the first day of the plan year, and
- The plan is funded out of the employer’s general assets, insurance, or both.
ERISA Form 5500 Reporting Deadlines
For ICHRAs that operate on a calendar year (Jan. 1 through Dec. 31), the Form 5500 filing is due on or before July 31, 2022. For ICHRAs that first started during the 2021 calendar year and intend to be operated on a calendar year going forward, the first plan year is a “short” plan year that ends on Dec. 31, 2021. The Form 5500 for the short plan year is due on or before July 31, 2022.
Penalties
Significant penalties apply if Form 5500 is not filed, is filed but incomplete, or is filed late. As explained in the Form 5500 Instructions, an administrative penalty of up to $2,233 a day for each day a plan administrator fails or refuses to file a complete and accurate report could be assessed.
If a Form 5500 has not been filed, has been filed but is incomplete, or will be filed late, the Department of Labor offers the Delinquent Filer Voluntary Compliance Program (“DFVC Program”) to fix the compliance problem for a significantly reduced penalty. Nexben has strategic relationships to provide help with Form 5500 filings and the DFVC Program.
Filling out the Forms
The filing requirements were recently finalized and Nexben has the information and support you need, simplifying the overall reporting process.
The ACA filing requirements are unique. Working with an expert team to properly prepare and file the reports is extremely important. Should you choose to forego using our experienced filing team, Nexben will provide a data file upon request.
Contact the Nexben Customer Care Team to get the filing process started. Call 1-855-4-NEXBEN.