1095-B and ICHRA: ACA Employer Reporting Requirements in 2026

ACA reporting and ICHRA: the two-track system

The ACA created two parallel reporting tracks that exist regardless of how an employer structures health benefits. One track covers minimum essential coverage (MEC) reporting; the other covers large employer compliance with the employer mandate. ICHRA sits differently on each track depending on the employer's size.

For Applicable Large Employers (ALEs) — those with 50 or more full-time equivalent employees — the relevant forms are Form 1094-C (the transmittal) and Form 1095-C (the employee-level statement). These forms were designed to document whether the employer offered coverage that meets minimum value and affordability standards under IRC §4980H. When an employer switches from a group health plan to ICHRA, it does not exit the 1094-C/1095-C system — it uses different indicator codes to reflect the ICHRA offer instead of a traditional plan offer.

For non-ALEs — employers with fewer than 50 FTEs — the ACA employer mandate does not apply, so 1095-C is not required. The question becomes whether the employer must file Form 1095-B. Form 1095-B is used to report minimum essential coverage provided directly by an insurer or by a self-insured employer. Because ICHRA reimburses employees for coverage they purchase individually from an insurance carrier, the carrier — not the employer — is responsible for the 1095-B that goes to the covered individual. The non-ALE employer itself has no 1095-B filing obligation under a standard ICHRA arrangement.

This distinction matters because small employers sometimes assume that offering ICHRA creates a new filing burden. In practice, it replaces an existing burden (1095-B from a group carrier) with essentially nothing at the employer level, while shifting MEC reporting back to each employee's individual carrier.

How ALEs report ICHRA on Form 1095-C

If you are an ALE and you offer ICHRA to at least one class of employees, the employee-level reporting on Form 1095-C uses a specific set of indicator codes that the IRS introduced when ICHRA rules took effect in 2020. Getting these codes right is essential — incorrect codes can trigger IRS notices, trigger the employer shared responsibility penalty (ESRP), or create reconciliation problems for employees claiming premium tax credits.

Line 14 — Offer of Coverage: For any month in which an employee was offered an ICHRA, use Code 1I. This code was created specifically for ICHRA and indicates that the employer offered an Individual Coverage HRA. If the ICHRA was offered to the employee only, report 1I with no dependent coverage code. If offered to the employee and dependents, the code structure follows the same dependent suffix logic as traditional coverage codes (1I for employee only, or combined with dependent codes as applicable per current IRS instructions).

Line 15 — Employee Share of Lowest Cost Monthly Premium: For ICHRA, this line reflects the employee's required contribution after accounting for the ICHRA allowance. Specifically, it is the lowest-cost self-only silver plan premium available to the employee in their rating area, minus the monthly ICHRA allowance. If the ICHRA allowance fully covers the benchmark plan premium, the Line 15 amount could be zero. This calculation is also the core of the affordability determination — the same figure used to apply the 9.78% affordability safe harbor (2026 rate) that determines whether an employee can access premium tax credits.

Line 16 — Applicable Section 4980H Safe Harbor: The Series 2 codes on Line 16 indicate why the employer should not be assessed an ESRP for that employee-month. Code 2C means the employee enrolled in coverage offered. Code 2F indicates the W-2 safe harbor was used. Code 2G indicates the federal poverty line safe harbor. For ICHRA, the same Series 2 codes apply as for traditional coverage — affordability is judged by the same standards, and Line 16 documents which safe harbor (if any) applies.

One complexity unique to ICHRA: employees in different geographic areas may face very different benchmark plan premiums, which means the same dollar ICHRA allowance may be affordable for one employee and unaffordable for another. This requires the employer (or its ICHRA administrator) to calculate Line 15 on a per-employee, per-location basis rather than using a single company-wide number. Software and ICHRA platforms that support ACA reporting handle this calculation automatically, pulling each employee's home zip code or county against the benchmark plan data published annually by the Department of Health and Human Services.

Non-ALEs and ICHRA: why 1095-B is usually not your problem

Small employers under the 50 FTE threshold are often confused about whether they need to do anything for ACA reporting when they offer ICHRA. The short answer is: in most cases, no employer-level filing is required.

Here is why. Form 1095-B exists to document that an individual had minimum essential coverage during a given tax year, so they can satisfy the individual shared responsibility requirement (which was reduced to $0 in 2019 at the federal level, though some states still impose their own mandates). Under the ACA rules, 1095-B is filed by:

• Insurance carriers (for fully-insured individual and group coverage)
• Self-insured employers (for plans they fund directly)
• Government agencies (for Medicare, Medicaid, CHIP, etc.)

ICHRA does not make an employer self-insured. The employer's obligation is to fund the HRA allowance; the actual health coverage is an individual insurance policy purchased by the employee from a licensed carrier. That carrier files the 1095-B for the employee's individual plan — the employer has no 1095-B obligation to create.

The exception would arise in the unlikely scenario where a small employer operates a self-insured health plan alongside the ICHRA (for example, a self-insured dental plan). In that case, 1095-B would be required for the self-insured coverage, but not for the ICHRA component itself.

For state individual mandates — currently active in California, Massachusetts, New Jersey, Rhode Island, Vermont, and Washington D.C. — employers should check whether state-level reporting obligations exist. Some states require separate reporting to the state tax authority, and the rules differ from the federal framework.

What employees receive and how they use it for taxes

Understanding the employee side of the reporting cycle helps employers answer questions from their workforce during open enrollment and tax season.

An employee covered under an ALE's ICHRA arrangement will receive Form 1095-C from their employer by March 2 of the following year. The form documents the months they were offered ICHRA (Line 14 Code 1I), their required contribution (Line 15), and any applicable safe harbor code (Line 16). Employees do not need to attach Form 1095-C to their federal tax return, but they should keep it for their records.

Separately, the employee will receive Form 1095-A from the Health Insurance Marketplace (HealthCare.gov or their state exchange) if they purchased a plan there. Form 1095-A is used to complete Form 8962, which reconciles advance premium tax credit payments against the employee's actual APTC eligibility. If the employee received APTC but was enrolled in an affordable ICHRA for the same months, they may owe back some or all of the credits — a compliance point that must be clearly explained during employee onboarding. See our post on ICHRA affordability and the safe harbor calculation for a full breakdown of how this reconciliation works.

Employees who work for non-ALEs and are covered under ICHRA will receive a Form 1095-B from their individual insurance carrier — not from the employer. They use it the same way: to confirm MEC coverage for state mandate purposes. The employer simply does not appear in the chain.

Deadlines, electronic filing, and who actually does the work

The ACA reporting calendar for plan year 2026 has three key dates:

• January 31, 2027: Internal deadline to finalize employee data, confirm all hire/termination dates, and validate ICHRA allowance amounts and affordability calculations for each employee-month. This is the "prep" date, not an IRS deadline, but missing it makes the later deadlines nearly impossible to meet without errors.
• March 2, 2027: Deadline to furnish Form 1095-C to all full-time employees. Delivery can be electronic (with employee consent) or by mail. Postmarked by March 2 satisfies the requirement for paper delivery.
• February 28, 2027 (paper) / March 31, 2027 (electronic): IRS filing deadline. Employers submitting 10 or more information returns are required to file electronically through the IRS FIRE (Filing Information Returns Electronically) system or an authorized e-file provider. Most ICHRA platforms and ACA reporting vendors handle FIRE submission.

Penalties for failure to furnish or file are indexed to inflation and currently stand at $330 per return per failure, with a maximum of $3,987,000 per year for large employers. Intentional disregard doubles the per-return penalty to $660 with no cap. The IRS does grant automatic extensions for good cause — file Form 8809 before the due date to request 30 extra days for furnishing.

As for who handles the actual reporting: most ICHRA administrators include some level of ACA reporting support, but the scope varies significantly. Some platforms provide data exports formatted for upload to an e-file vendor; others offer full-service filing including FIRE submission and employee furnishing. A small number charge extra for ACA reporting as an add-on. Before selecting an ICHRA administrator, ask specifically whether 1094-C/1095-C preparation, employee furnishing, and IRS electronic filing are included, and get the answer in writing in your service agreement. The legal obligation to file belongs to the employer regardless of what the vendor handles operationally. Also read our post on ICHRA employee notice requirements to make sure the 90-day pre-enrollment notice is on your compliance calendar alongside the year-end reporting deadlines.