ACA reporting requirements for ICHRAs

Individual coverage health reimbursement arrangements (ICHRAs) give employers a flexible, defined contribution approach to healthcare benefits. With that flexibility comes important Affordable Care Act (ACA) reporting responsibilities.

If you or your clients offer an ICHRA, understanding which forms to file and when to file them is essential to staying compliant and avoiding penalties.

In this article, we'll review ACA reporting requirements for employers offering ICHRA plans.

In this blog post, you'll learn:

• How to handle end-of-year reporting.
• ACA regulations ALEs need to follow.
• How Remodel Health handles compliance requirements for ICHRAs.

Who must comply with ACA reporting requirements?

Under the ACA, most employer reporting obligations depend on whether your business is an applicable large employer (ALE). An ALE is an organization with 50 or more full-time equivalent employees (FTEs) on average during the prior calendar year. ALEs must comply with the ACA's employer mandate for offering affordable health insurance coverage to at least 95% of full-time employees and their dependents, while smaller employers don't.

Even though small employers don't have to offer health insurance to their employees, they can still offer health benefits to improve employee recruitment and retention. Reporting requirements differ for small employers with ICHRAs, but they still have to file coverage information with the IRS.

What forms do you need to file?

Even though your employees are choosing their own coverage, the IRS still needs to know that you’re offering a plan that meets the employer shared responsibility provision (ESRP) rules if you’re an ALE. That’s where Forms 1094 and 1095¹ come in.

Form 1094

Form 1094 serves as a cover sheet for the employer’s annual filing. It provides summary details, including whether the employer is an ALE, the total number of employees, and the type of coverage offered, such as an ICHRA. Small businesses with fewer than 50 full-time equivalents (FTEs) use Form 1094-B², while ALEs use Form 1094-C.

Form 1095

Employers must file Form 1095 for each employee. This allows the IRS to confirm that the employee and their dependents had minimum essential coverage (MEC). The form includes the employee’s contact information, a code identifying the type of coverage on line 8 (for an ICHRA, this is code G), employer details, and other relevant information.

Non-ALEs use Form 1095-B. For ALEs filing Form 1095-C, the form must also report affordability and safe harbor information. ALEs can report how they calculated affordability using ICHRA-specific relief codes.

Form W-2 reporting requirements

Employers don't report ICHRA benefits on employees’ W-2 forms. ICHRA reimbursements aren't subject to income tax if the employee maintains MEC. However, if you mistakenly reimburse or provide payment for an employee for any month they didn’t have MEC, you’ll need to report that amount as taxable income.

What deadlines do you need to meet?

The same deadlines apply to Form 1094-B/C and Form 1095-B/C for 2025 calendar year plans. However, you're not required to provide Form 1094 to your employees.

If you file 10 or more information returns during the year, the IRS requires you to file them electronically. This means most organizations will e-file the forms.

Additionally, some states with individual health insurance mandates, such as California³, have other deadlines for providing a similar form to employees.

What are the penalties for non‑compliance?

Filing on time and accurately is important. Mistakes can get expensive, and deliberate non-compliance is even more costly.

For the 2025 tax year, the IRS can charge the following penalties:

• Late or incorrect filing: $340 per return, up to a total of $4,098,500 for the year.
• Incorrect or missing statements to employees: $340 per statement, also up to $4,098,500 for the year.
• Intentional disregard: If you ignore the rules, the penalty jumps to $680 per return with no annual maximum.

Additional ICHRA compliance requirements

Beyond ACA reporting, employers offering an ICHRA should also keep two other important compliance obligations in mind: the Patient-Centered Outcomes Research Institute (PCORI) fee and Employee Retirement Income Security Act of 1974 (ERISA) requirements.

PCORI fee

An ICHRA is a self-funded plan, so employers have to pay the PCORI fee each year. You pay this fee using Form 720. It's due by July 31. You calculate the fee by multiplying the current PCORI rate by the number of lives covered under the plan, making it important to keep accurate counts of participants.

Form 5500 and the Summary Annual Report

Under ERISA, employers with 100 or more plan participants at the start of the plan year must file Form 5500 with the Department of Labor (DOL). For calendar-year plans, this filing is generally due by July 31 following the end of the plan year.

If your organization has to file Form 5500, you also need to provide a Summary Annual Report (SAR) to plan participants. The SAR gives employees a clear summary of the plan’s financial condition and the information reported on Form 5500, keeping them informed and helping maintain transparency.

How Remodel Health helps with ACA reporting for ICHRAs

ACA regulations for ICHRAs can be complex to navigate on your own. Having the right support can give you confidence that your ICHRA is being administered and reported correctly. With Remodel Health as your ICHRA plan administrator, you can let out a sigh of relief come tax time.

Through our ICHRA+ platform and compliance expertise, we:

• Simplify key compliance tasks with pre-filled Form 720s for PCORI fees
• Support affordability calculations when setting ICHRA contributions using applicable ACA safe harbors
• Provide data and filing instructions needed for Forms 1094 and 1095 reporting
• Reduce the risk of reporting errors that can lead to IRS notices or penalties

Plus, we made shopping for individual health insurance policies easy for your employees. They don't have to navigate the Health Insurance Marketplace on their own. They can use our decision-support tools and recommended plan features, or connect with one of our advisors for personalized support.

Conclusion

Offering an ICHRA is a powerful way for employers to control costs while giving employees more choice in their health coverage. However, success with an ICHRA doesn't stop at plan design. Accurate ACA reporting is a critical part of staying compliant and avoiding penalties. With Remodel Health's experts on your side, you can face tax time with confidence each year.

This blog post was originally published on April 27, 2023. It was last updated on January 13, 2026.

References

1. IRS 2025 Instructions for Forms 1094-C and 1095-C
2. IRS Instructions for Forms 1094-B and 1095-B (2025)
3. State of California Franchise Tax Board