How Payroll Data Supports ICHRA Affordability and Employer Reporting

Learn how payroll data may support ICHRA affordability testing and employer reporting.

Sep 7, 2026

For an applicable large employer, the payroll information used for affordability testing depends on the safe harbor selected.

  • The Rate of Pay safe harbor uses the employee's rate of pay.

  • The W-2 safe harbor uses Box 1 wages.

Payroll data may also support tracking full-time status and the months in which an ICHRA was offered.

Payroll and eligibility records can help prepare Form 1095-C, but they do not populate the form automatically. For an ICHRA:

  • Line 14 identifies the type of coverage offered.

  • Line 15 generally reflects the employee required contribution calculated using the applicable employee-only lowest-cost silver plan premium and the ICHRA amount available to the employee.

  • Line 16 may report an affordability safe harbor or another applicable circumstance.

For Form W-2 reporting, an employer is not required to include the cost of HRA coverage in Box 12, Code DD, as described in Notice 2012-9, Q&A-18.