Yes. You must identify ineligible participants (such as 2%+ owners of pass-through entities or anyone else who cannot receive tax-free CHOICE benefits) during onboarding so Thatch can properly record their healthcare payments as taxable income and provide correct tax reporting.
Failing to flag ineligible participants can result in incorrect tax treatment and potential compliance issues. If you're unsure about someone's eligibility status, consult your tax advisor before completing onboarding.
To learn more, see our detailed article here: Supporting team members who aren't eligible for CHOICE (formerly ICHRA)