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Understanding Form 1095-B and ICHRA: A Guide for Employers (2025 Edition)

Published on

Feb 19, 2025

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Author

Stacy Edgar

Small employers and benefits brokers face a critical challenge: offering competitive health benefits while managing escalating costs. Forward-thinking businesses are turning to Individual Coverage Health Reimbursement Arrangements (ICHRA) as a game-changing solution, gaining the flexibility to offer personalized benefits while controlling expenses. But implementing an ICHRA brings new reporting responsibilities – in particular, Form 1095-B filings. This guide breaks down exactly what you need to know about both ICHRA and Form 1095-B to confidently modernize your benefits offering.

What is the Form 1095-B?

Small employers who offer self-funded health plans must report this coverage annually to the IRS using Form 1095-B. This is because self-funded plans qualify as minimum essential coverage (MEC) under the Affordable Care Act, and employers who provide MEC through self-funded arrangements are responsible for reporting – not an insurance company. An ICHRA is considered a type of self-funded health plan. If you’re an employer offering an ICHRA, you must file Form 1095-B.

The form includes:

Information about the covered individual
Details about the employer or coverage provider
Insurance company information
List of all covered individuals
Fill in “G” to indicate that you offered an ICHRA to your employees

Filing Deadlines for the Form 1095-B

Employers must meet two key deadlines:

Provide Forms 1095-B to employees by March 2, 2025
File Forms 1095-B and the 1094-B Transmittal with the IRS by February 28, 2025 if filing by paper, or March 31, 2025 if filing electronically

How to File the Form 1095-B

Employers have three main options for filing Form 1095-B:

Download and mail paper forms from the IRS website (irs.gov)
Use a third-party e-filing service like Track 1099
File through your payroll provider if they offer 1095-B support

Note that electronic filing is required if you're submitting 250 or more forms.

Employee Instructions: What to do with the Form 1095-B

Employees should review the form to verify that their personal information, coverage details, and months of health insurance enrollment are accurate. They should keep the form with their other tax records. Other than this, no other action is typically required.

If employees notice any errors on their Form 1095, they should contact their employer or insurance provider promptly to request corrections.

Venture’s ICHRA Compliance Support

Have additional questions about Form 1095-B reporting or implementing an ICHRA? Venture’s team of benefits experts is here to help guide you through every step of the process and ensure your program's success. Don’t hesitate to get in touch!

FAQs

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We're here to help you make informed decisions on health insurance for you and your family. Check out our FAQs or contact us if you have any additional questions.

How does an ICHRA work?

ICHRA stands for Individual Coverage Health Reimbursement Arrangement (ICHRA). This health arrangement allows you to pick your own health insurance plan using your employer’s monthly tax-free allowance. These funds can be used to cover insurance premiums, including dental and vision, as well as qualified medical expenses.

What are the benefits of an ICHRA?

Your health plan belongs to you, and you can keep your health insurance if you leave your company.
You get to choose from any qualified health plan on the market. Venteur can help you select a plan where your preferred doctors, providers, and prescriptions are covered.
If you choose a health plan that costs less than your employer contribution, the extra funds are added to Venteur’s Health Wallet, an account used to pay for qualified medical expenses.

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What's the difference between an ICHRA and a Group Plan?

Group health insurance plans are purchased by companies and offered to their employees. Traditional group plans take a one-size-fits-all approach to healthcare, giving employees limited choice when it comes to their coverage options. Employer-sponsored ICHRAs give employees a tax-free allowance to pick any plan on the public exchange that meets their unique needs.

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What is the Health Wallet and how can I use it?

1. What Your Health Wallet Balance Represents:

Your Health Wallet balance could be thought of as a measure of the medical expense reimbursements you're entitled to under your health insurance plan. It's essential to note that it isn't quite like a bank account with a set amount of accessible cash. Rather, consider it as a marker of what you're eligible to get reimbursed for as part of your ICHRA plan.

When you shop for insurance through the app, you will see a dollar amount that is available for out-of-pocket expenses. This amount is what gets contributed to your Health Wallet account for your use in reimbursements. However, depending on how your employer has setup the account, it may be available immediately or it may be available after every monthly invoice.

2. Your Health Wallet Account:

When your account is setup, there is a predetermined way on how your Health Wallet functions for your reimbursement funds. The first scenario is that there is money that has been set aside at the start of the period which can be used for your reimbursements. You may see the entire amount entitled to you is immediately available for medical expense reimbursements. It's like having a store of health benefits ready to be used when you need them.

3. Simplifying the Health Wallet Experience:

We're always striving to enhance your experience and are currently working on making the Health Wallet balance operate more like a pre-paid debit card. This shift aims to streamline the funding process further and allow you quicker and more direct access to your health reimbursements, leading to an even smoother journey for you.

Remember, whether your account shows the funds immediately or after every invoice, it doesn't affect the overall sum you're entitled to under your ICHRA plan; it merely affects the timing of when you will receive the reimbursements.

Your trust is important to us, and we're continually striving to make our services better for you. If you ever have questions about your Health Wallet or anything that would help make for a more understandable benefits experience with us, don't hesitate to reach out to our customer service team.

Do ICHRAs meet the Affordable Care Act's employer mandate?

The Affordable Care Act (ACA) requires that employers with more than 50 full-time equivalent employees provide health insurance to their employees. This is known as the 'employer mandate'.

ICHRAs can meet the mandate as long as they are considered 'affordable.' According to IRS, 'an ICHRA is affordable if the remaining amount an employee has to pay for a self-only silver plan on the exchange is less than 8.39% of the employee’s household income.'

To simplify, this means that the ICHRA contribution an employee receives cannot be less than the lowest-cost silver plan available to the employee - (9.02% of the employee's household income).

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