IRS Provides Additional Codes for Individual Coverage HRAs Under Section 6056

For plan years beginning on or after January 1, 2020, employers may offer HRAs integrated with individual health insurance coverage or Medicare, subject to certain conditions. The Internal Revenue Service (IRS) recently provided two additional codes from Code Series 1 that can be used on Form 1095-C, line 14, for reporting such offers of individual coverage HRAs (ICHRAs) to an employee and their spouse, but not to dependent children, under Section 6056. These codes, previously reserved on the instructions for Forms 1094-C and 1095-C, are as follows:

  • 1T. — To be used for an individual coverage HRA offered to employee and spouse (no dependents) with affordability determined using the employee’s primary residence location ZIP code.
  • 1U. — To be used for an individual coverage HRA offered to employee and spouse (no dependents) using the employee’s primary employment site ZIP code affordability safe harbor.

Originally, individual statements were due by January 31, 2021, however, the IRS issued Notice 2020-76 in October of 2020 to extend the furnishing deadline. Therefore, reporting entities must file returns with the IRS by March 1, 2021. If filing electronically, the deadline to file returns is March 31, 2021. Entities must also furnish statements to individuals by March 2, 2021.

To avoid costly penalties and remain compliant with the ACA, we encourage employers to become familiar with these deadlines and instructions. If the deadline is missed, employers should continue to make efforts to file their returns as soon as possible.

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It is our goal to guide you through ongoing change. Should you have any questions regarding this information, please do not hesitate to contact Creative Benefits, Inc. at 866-306-0200 or solutions@creativebenefitsinc.com.