By The ACA Team
As discussed in our most recent ACA webinar, the IRS recently released a draft of the 2020 version of Form 1095-C. This filing year brings changes to the way the form looks as well as the additional details the IRS requires employers to report. One of the changes is the requirement to report on ICHRA for every month of the reporting year.
ICHRA stands for Individual Coverage Health Reimbursement Arrangement and they became available for employers to start offering on January 1, 2020. An ICHRA is a health benefit for employers of all sizes that allows businesses, nonprofits, churches, and other groups to reimburse employees tax-free for qualified medical expenses.
With an ICHRA, the business offers employees a monthly allowance. Employees then choose and pay for individual coverage, and their company reimburses them up to the allowed amount. All reimbursements are exempt from both payroll and income tax.
Business eligibility
All employers with at least one W-2 employee are eligible to offer an ICHRA. This includes businesses, nonprofits, government entities, and religious organizations.
Employee eligibility
The federal government requires employees participating in an ICHRA to have individual health insurance. Employees covered by a spouse’s group health insurance plan, employees participating in a health care sharing ministry, or employees who opt out of employer-sponsored health insurance coverage cannot participate in an ICHRA.
Any questions? Are you interested in offering an ICHRA to your employees? Reach out to us with any questions!