How to Choose Form 1095-C Codes for Lines 14-16
Subscribe
How to Choose Form 1095-C Codes for Lines 14-16
Understanding how to choose Form 1095-C codes for lines 14-16 can be overwhelming. Managing ACA compliance all year is challenging enough, but it’s essential to select the appropriate codes for Forms 1095-C. If you enter incorrect codes, it could mean ACA penalties and more time spent fixing those errors. To help you avoid this burden, let’s review the different codes you can input into lines 14-16 of Form 1095-C so you’re submitting error-free ACA reporting.
What is Form 1095-C?
Form 1095-C is the IRS form employers provide to their employees detailing employer-based health coverage they received during that calendar year. Every applicable large employer (ALE) needs to furnish a Form 1095-C to each employee with information about their medical benefits for reporting purposes.
Who Must File Form 1095-C?
Employers furnish their employees with Form 095-C every year for tax purposes. Form 1095-C is intended to provide employees with information about their medical benefits for reporting to the IRS. Here is what you need to include on Form 1095-C for each employee:
- Line 14: What medical benefit did you offer the employee?
- Line 15: How much did the medical benefit offer cost the employee?
- Line 16: What did the employee do when the offer was made, or why was the offer not made?
What Do the Codes on the Form 1095-C Mean?
Every ALE needs to provide a Form 1095-C with Lines 14-16 completed with the correct information. Here is a breakdown of each line and what the corresponding codes mean:
Line 14 – Offer of Coverage
Line 14 specifies the type of coverage, if any, offered to an employee, spouse, and dependents. The code chosen must indicate the coverage offered to the employee. This code may not match the coverage the employee chose.
Employers must enter a code for each calendar month, even if the employee was not a full-time employee for one or more months. If the same offer applies to all 12 months, complete the “All 12 Months”.
Line 15 - Employee Share of Lowest Cost Monthly Premium for Self-Only Minimum Value Coverage
For Line 15, enter the amount of the employee share of the lowest-cost monthly premium for self-only minimum essential coverage (MEC), providing minimum value (MV) offered to the employee. This amount may not equal the actual amount the employee is paying for coverage.
| Line 14 Codes | Line 14 Code Descriptions | Line 15 Entry |
|---|---|---|
| 1A | Qualifying Offer: Minimum essential coverage (MEC) providing minimum value (MV) offered to full-time employee with Employee Required Contribution equal to or less than 9.5% (as adjusted) of the mainland single federal poverty line and at least MEC offered to spouse and dependent(s). | Leave Blank |
| 1B | MEC providing MV offered to the employee only. | Required |
| 1C | MEC providing MV offered to the employee and at least MEC offered to dependent(s) (not spouse). | Required |
| 1D | MEC providing MV offered to the employee and at least MEC offered to the spouse, not dependent(s). Do not use code 1D if the coverage for the spouse was offered conditionally. Instead, use code 1J. | Required |
| 1E | MEC providing MV offered to the employee and at least MEC was offered to dependent(s) and spouse. Do not use code 1E if the coverage for the spouse was offered conditionally. Instead, use code 1K. | Required |
| 1F | MEC NOT providing MV offered to the employee; employee and spouse or dependent(s); or employee, spouse, and dependents. | Leave Blank |
| 1G | An offer of coverage for at least one month of the calendar year to an individual who was not an employee for any month of the calendar year or to an employee who was not a full-time employee for any month of the calendar year (which may include one or more months in which the individual was not an employee) and who enrolled in self-insured coverage for one or more months of the calendar year. NOTE: Code 1G applies either for the entire year or not at all. | Leave Blank |
| 1H | No offer of coverage (employee was not offered any health coverage or employee offered coverage that is not MEC, which may include one or more months in which the individual was not an employee). | Leave Blank |
| 1J | MEC providing MV was offered to the employee and at least MEC conditionally offered to the spouse; MEC was not offered to dependent(s). | Required |
| 1K | MEC providing MV offered to the employee; at least MEC offered to dependents; and at least MEC conditionally offered to the spouse. | Required |
| 1L | Individual coverage health reimbursement arrangement (HRA) offered to you only with affordability determined by using the employee’s primary residence location ZIP Code. | Required |
| 1M | Individual coverage HRA offered to you and dependent(s) (not spouse) with affordability determined by using the employee’s primary residence location ZIP Code. | Required |
| 1N | Individual coverage HRA offered to you, spouse, and dependent(s) with affordability determined by using the employee’s primary residence location ZIP Code. | Required |
| 1O | Individual coverage HRA offered to you only using the employee’s primary employment site ZIP Code affordability safe harbor. | Required |
| 1P | Individual coverage HRA offered to you and dependent(s) (not spouse) using the employee’s primary employment site ZIP Code affordability safe harbor. | Required |
| 1Q | Individual coverage HRA offered to you, spouse, and dependent(s) using the employee’s primary employment site ZIP Code affordability safe harbor. | Required |
| 1R | Individual coverage HRA that is NOT affordable offered to you; employee and spouse or dependent(s); or employee, spouse, and dependents. | Required |
| 1S | Individual coverage HRA offered to an individual who was not a full-time employee. | Required |
Line 16 - Section 4980H Safe Harbor Codes and Other Relief for ALE Members
Line 16 provides an opportunity for an employer to indicate an exception to a penalty. The following are the available codes in Code Series 2 an employer may choose from and what they mean. If the same code applies for all 12 calendar months, you may either enter the code in the “All 12 Months” box and not complete the monthly boxes. If none of the codes apply for a calendar month, leave the line blank for that month.
| Line 16 Code | Line 16 Code Descriptions |
|---|---|
| 2A | Employee not employed during the month |
| 2B | Employee is not a full-time employee |
| 2C | Employee enrolled in coverage offered |
| 2D | Employee is in a limited non-assessment period |
| 2E | Multi-employer interim rule relief |
| 2F | Section 4980H affordability Form W-2 safe harbor |
| 2G | Section 4980H affordability federal poverty line safe harbor |
| 2H | Section 4980H affordability rate of pay safe harbor |
If more than one code applies to Line 16, use the following guidelines:
- If 2E and any other Code series 2 applies, enter 2E
- If 2C and any other Code series 2 applies other than Code 2E, enter 2C
- If 2B and 2D apply, enter 2D
For more information on 1094-C and 1095-C annual reporting, read our article.
Note
There is no code to enter on Line 16 to indicate that a full-time employee offered coverage either did not enroll in the coverage or waived the coverage.
How APS Can Help
APS offers a compliance and reporting solution that takes the complexity out of the Affordable Care Act. Our error-checking algorithm ensures 1095-C codes are valid and data is formatted correctly for reporting. Accurately capture and report health plan coverage information to the IRS with pre-populated forms. ACA tracking has never been easier, and we’ll even e-file on your behalf.
To learn more, please call 855-945-7921.
Linda
Business Administrator, Christ’s Church
The support for onboarding is excellent and their customer service is top notch. APS worked to get all of our needs met, and they continue to be problem solvers for us. Initially, I needed help navigating the system and they worked with me until I was comfortable and confident using the system.
Recent Posts
Check out more great articles from the APS Blog covering HR, payroll, and everything in between.
Finance Recruitment Tips: a Comprehensive List
Recruitment in the finance industry is challenging. To help you attract the best talent we’ve put together this list of amazing finance recruitment tips. Learn more!
5 Benefits of Switching to Paperless Payroll
In this article, we’ll discuss the 5 benefits of switching to paperless payroll to save you time, money, and eliminate potential errors.
APS Adds Quick Enrollment to Benefits Administration
APS has added Quick Enrollment functionality to our health benefits administration solution to simplify the open enrollment process. Learn more!
Competitive Recruitment: How To Attract Talent
How do you make sure your company stands out in a job market where every company is competing for the best talent? These strategies can help. Learn more!
How to Avoid W-2 Form Errors
Learn the top ten most common Form W-2 errors and how to correct them so you can avoid potential errors and fines.