Comprehensive ACA Software – Manage Compliance Throughout the Year
This post is for Applicable Large Employers (ALEs) required to comply with the Affordable Care Act. We hope you find it useful.
Individual Coverage Health Reimbursement Arrangements (ICHRAs) allow employers to reimburse employees for individual health insurance coverage obtained on their own. ICHRAs are considered minimum essential coverage. Companies that offer an ICHRA must report to the IRS under the Affordable Care Act (this was required for the 2020 tax year and future years).
Applicable Large Employers must submit Form 1095-C for a non-full-time employee who was enrolled in ICHRA coverage. This helps the IRS determine if an ALE met the requirements of the Employer Mandate or if a penalty applies.
ACA software can streamline ACA data management to help reduce tracking errors and help monitor compliance throughout the year. Companies that are manually tracking offers of coverage and affordability may benefit from comprehensive ACA software.
An ICHRA is sometimes called an individual integrated HRA, and the 2020 ICHRA provisions resulted in new 1095-C reporting codes for line 14 (1L-1S) for 2020 tax year filing.
The IRS recently released a draft with instructions for new codes regarding HRAs (the draft forms are early release forms and may be revised before they are officially published).
1T and 1U are new Line 14 1095-C codes that involve a Health Reimbursement Arrangement (HRA) offer of coverage by the employer.
According to the IRS, code 1T is applicable when “individual coverage HRA [was] offered to employee and spouse (no dependents) with affordability determined using employee’s primary residence ZIP code.
1U [is used for] individual coverage HRA offered to “employee and spouse (no dependents) using employee’s primary employment site ZIP code affordability safe harbor.” These codes exclude dependents as recipients of the HRA coverage extended.
Passport Software’s ACA software annual update program keeps the software current in order to accommodate new fields or codes required for correct filing.
We recently received the following question from an ACA software customer about groups: “We have questions specifically about how groups that have moved to the ICHRA should handle the 1095s in 2021.”
Adam, our HR Compliance Manger and ACA specialist replied, “I’m guessing you are aware of all the ICHRA provisions added last year and probably the two additional ICHRA Line 14 codes added for this coming filing season. Our ACA software makes it easy. You can set the Line 14 codes as a default, or mass update for a group, as well as change any individual employee or month.
When you do default/mass update/manually change these codes, our ACA software automatically pairs the corresponding Zip Code (from the company address or home address for each employee), but you can also override the Zip Code if necessary.”
You can also email firstname.lastname@example.org with questions.