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IRS Adds Codes for Individual Coverage HRAs on Form 1095-C

BY: Jyme Mariani, Esq. | 02/18/21

The IRS recently added two codes for reporting individual coverage health reimbursement arrangements (HRAs) on Form 1095-C, Employer-Provided Health Insurance Offer and Coverage [IRS, Additional Codes Are Available for Reporting an Offer of an Individual Coverage Health Reimbursement Arrangement (HRA), 2-2-21]. Last October, the IRS extended the deadline to distribute the 2020 form to employees, from January 31 to March 2, 2021 (Notice 2020-76, 10-2-20).

New Codes

Applicable large employers (ALEs) that offer individual coverage HRAs can now use two previously reserved codes on Form 1095-C, Line 14, for reporting offers of coverage for 2020:

  • Code IT—individual coverage HRA offered to employee and spouse (no dependents) with affordability determined using employee’s primary residence location ZIP code.
  • Code 1U—individual coverage HRA offered to employee and spouse (no dependents) using employee’s primary employment site ZIP code affordability safe harbor.

Penalty Relief Extended

In addition to extending the deadline to furnish the form to employees to March 2, 2021, the IRS extended to the 2020 tax year the good faith relief from penalties for failure to timely furnish and file the information returns. In determining good faith, the IRS will take into account whether an employer made reasonable efforts to prepare for reporting the required information to the IRS and furnishing it to individuals.

The relief applies to missing and inaccurate taxpayer identification numbers and dates of birth, as well as other required information. No relief is provided in the case of reporting entities that do not make a good-faith effort to comply with the regulations or that fail to file an information return or furnish a statement by the extended due date.

To learn more about federal and state laws, regulations, and information to keep your company's payroll operations in compliance, check out Payroll Source Plus!


Jyme Mariani, Esq., is Managing Editor of Payroll Currently and Payroll Information Resources for the APA.