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

Large employers and benefits brokers navigating the complexities of health benefits administration face a significant challenge: maintaining ACA compliance while optimizing their benefits strategy. Forward-thinking organizations are exploring Individual Coverage Health Reimbursement Arrangements (ICHRA) as a strategic solution, offering the ability to provide personalized health benefits while maintaining predictable costs. However, implementing an ICHRA alongside traditional group health plans requires careful attention to reporting requirements – particularly regarding Form 1095-C filings. This guide provides essential insights into ICHRA implementation and Form 1095-C reporting to help large employers maintain compliance while modernizing their benefits offerings.

What is the Form 1095-C?

Form 1095-C is an IRS tax form that reports employer-provided health insurance coverage information. Large employers (those with 50 or more full-time employees) must provide this form to their employees and the IRS as part of the Affordable Care Act's (ACA) Employer Mandate. The form details the type of health coverage and the months during which coverage was available.

For employers offering an Individual Coverage Health Reimbursement Arrangement (ICHRA), Form 1095-C documents the ICHRA funding amounts and coverage periods. It confirms whether or not the ICHRA was affordable and met the ACA Employer Mandate.

Filing Deadlines for the Form1095-C

Meeting IRS deadlines is crucial for maintaining compliance and avoiding penalties. For the 2025 tax year, employers must file their Form 1095-C and 1094-C transmittal with the IRS by February 28 if filing by paper or March 31 if filing electronically.

Employers filing 250 or more Forms 1095-C must file electronically through the IRS AIR (Affordable Care Act Information Returns) system. The good news is that many payroll platforms have integrated 1095-C filing capabilities, streamlining the process for employers. Alternatively, third-party providers like Track 1099 offer specialized filing services to ensure accurate and timely submission.

Note: For tax year 2024, distributing 1095-Cs to employees is optional. 

How to File Form 1095-C

Success in filing Form 1095-C starts with thorough preparation. Before beginning the filing process, gather these essential pieces of information:

1. Employee details:
   
   • Full legal names
   • Social Security numbers
   • Current mailing addresses
   • Employment status by month

2. Coverage information:
   
   • Monthly premium amounts for the lowest-cost on-exchange silver plan for self-only coverage
   • Detailed records of coverage offers and enrollment status
   • ICHRA allowance amounts (if applicable)
3. Required form sections:
   
   • Part I: Complete employee and employer identification information
   • Part II: Document coverage offers and premium information
   • Part III: List covered individuals 

ICHRA-Specific Reporting

When offering an ICHRA, employers face additional reporting complexities that require careful attention to detail. Here's what you need to know about the specific codes and reporting requirements:

• Use codes "1L" through "1S" for full-time employees based on ICHRA allowance amounts
• Apply code "1G" in Part II, Line 14 when the ICHRA is offered to part-time employees
• Document the monthly ICHRA amount in Part II, Line 15
• Indicate affordability status using code "2F" or "2H" in Part II, Line 16 based on your calculations

These columns tell the IRS exactly how your ICHRA program operates and whether it meets ACA requirements.

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

For employees, Form 1095-C documents their health coverage throughout the year. Upon receiving the form, employees should:

1. Carefully review all information for accuracy:
   
   • Verify personal information is correct
   • Confirm coverage months match their records
   • Check ICHRA allowance amounts against their benefit statements

2. They should maintain the form with their tax records, though it is not required to be filed with personal tax returns.

No other action is required.

Venture’s ICHRA Compliance Support

Navigating the complexities of Form 1095-C reporting and ICHRA implementation doesn't have to be overwhelming. Venture's benefits experts are ready to support you through every stage of the process. We ensure your program's success from initial setup to ongoing compliance monitoring.

Have questions about Form 1095-C reporting or implementing an ICHRA? Don't hesitate to contact our team for personalized guidance and support.