New 1095 Codes for Individual Coverage HRAs
by Vita, on February 10, 2021
It’s 1095 season! The IRS has announced two new codes for the 2020 Form 1095-C for use with an Individual Coverage HRAs (ICHRA). The IRS website indicates that employers offering ICHRAs can use two previously reserved codes (from Code Series 1 on Form 1095-C, line 14) for reporting offers of coverage for 2020:
Code 1T: This code indicates that an ICHRA was offered to an employee and spouse (not dependents) and that affordability was determined using the employee’s primary residence zip code.
Code 1U: This code indicates that an ICHRA was offered to an employee and spouse (not dependents) and affordability was determined using the employee’s primary employment site zip code under an affordability safe harbor.
This change corrects an oversight in the 2020 Form 1095-C code options. The existing code options did not address all the potential coverage options for an ICHRA. Specifically, codes for three coverage possibilities were available, but the scenario where ICHRA coverage was offered to an employee plus a spouse (without dependents) was not covered by the available code options. This update corrects that omission.