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            ACA Reporting: IRS Form 1095C Codes & What They Mean


            ACA Reporting: IRS Form 1095C Codes & What They Mean


            Purpose:

            The IRS has created two sets of codes in order to provide employers with a consistent way to describe their offers of health coverage. Each code indicates a different scenario regarding an offer of coverage, or explains why an employer should not be subject to a penalty for a particular employee, for a given month.




            Code Series 1 is used for Line 14 of Form 1095C and addresses:
            • Whether an individual was offered coverage.
            • What type of coverage was offered.
            • Which months that coverage was offered.

            Code Series 2 is used for Line 16 of Form 1095C and addresses:

            • Whether the individual was employed and, if so, whether he or she was full time or part time.
            • Whether the employee was enrolled in coverage.
            • Whether the employer is eligible for transition relief as an employer with a non-calendar year plan or as a contributor to a union health plan.
            •  Whether coverage was affordable and, if so, based on which IRS safe harbor.


            This document provides an overview of the codes, descriptions, an explanation of when the code should be used, and the effect of choosing a particular code.



            IRS Instructions for Forms 1094C and 1095C:

            Click on the IRS button below for the link to PDF Instructions (IRS website).




            Series 1 Codes - Form 1095C Line 14:


            Code

            What does the code mean?

            When to use the code

            1A

            Qualifying Offer:

             

            You offered MEC (minimum essential coverage) + MV (minimum value) to employee and you offered at least MEC to spouse + dependents.

             You offer coverage to EEs, spouses and dependents.

             Your coverage is affordable at the employee only level because the required employee contribution is equal to or less than 9.5% (as adjusted) of mainland single federal poverty line.

            1B

            MEC providing MV offered to employee only.

             You exclude spouses + dependents from your plan(s).

            1C

            MEC providing MV offered to employee and at least MEC offered to dependent(s) (not spouse).

             You exclude spouses from your plan.

            1D

            MEC providing MV offered to employee and at least MEC offered to spouse (not dependents)

             Dependents are not offered coverage.

             

             Do not use code 1D if the coverage for the spouse was offered conditionally. Instead use code 1J.

            1E

            MEC providing MV offered to employee and at least MEC offered to dependent(s) and spouse.

             The only difference between this code and 1A is that your coverage may not be affordable or it is affordable based on a safe harbor other than the federal poverty line.

             

             Do not use code 1E if the coverage for the spouse was offered conditionally. Instead use code 1K.

            1F

            MEC offered to employee; employee + spouse or dependent(s); or employee, spouse and dependents.

             You did not provide Minimum Value, only Minimum Essential Coverage.

            1G

            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 month(s) when the individual was not an employee)  - AND – 

             

            Who enrolled in self-insured coverage for one or more months of the calendar year.

            Example 1: An individual who is not your employee is offered coverage (1099 or contractors) for the Summer months for seasonal work and they were enrolled in self-insured coverage for Jan-March.

             

            Example 2: Let's say that same individual comes back to work for you in the fall as a part time employee, they were offered coverage as a part time employee and they were enrolled in self-insured coverage for Jan-March.

             

             Code 1G applies for the entire year or not at all. Therefore, if code 1G applies, you must enter code 1G on line 14 in the All 12 Months column or in each separate monthly box for all 12 months.

            1H

            No offer of coverage 

            - or -

            Offer did not meet MEC.

             You did not offer coverage to employee or; 

             

             You did offer coverage but it did not meet MEC.

             

            May include one or more months in which the individual was not an employee.

            1I

            Reserved

            Code not used for 2016 reporting year

            1J

            MEC + MV coverage offered to employee and MEC conditionally offered to spouse; MEC not offered to dependent(s).

             Employee + conditional offer to spouse.

             

             NOT offered to dependents

             

            See Conditional Offer of Spousal Coverage description below for more details.

            1K

            MEC + MV coverage offered to employee and MEC offered to dependent(s) and

            MEC conditionally offered to spouse.

             Employee + dependents and a conditional offer to spouse 

             

            See Conditional Offer of Spousal Coverage description below for more details.




            Conditional Offer of Spousal Coverage Description (new codes for 2018): 

            • Codes 1J and 1K address conditional offers of spousal coverage (also referred to as coverage offered conditionally).
            •  A conditional offer is an offer of coverage that is subject to one or more reasonable, objective conditions.
              • For example, an offer to cover an employee’s spouse only if the spouse is not eligible for coverage under Medicare or a group health plan sponsored by another employer.  
            • Using codes 1J and 1K, you may report a conditional offer to a spouse as an offer of coverage, regardless of whether the spouse meets the reasonable, objective condition.
            • To help employees and spouses who have received a conditional offer determine their eligibility for the premium tax credit (Medicaid or Health Exchange), you (the Company) should be prepared to provide, a list of any and all conditions applicable to the spousal offer of coverage. 
              • Your Benefit Policy in EHX should state who you offer coverage to and what requirements they must meet to be offered coverage (ie; full time employees and/or full time equivalent employee are offered coverage, spouses and dependents living at home are offered coverage).
            • You may not make a conditional offer of coverage to dependents. Your Benefit Policy in EHX should state there is either an offer of coverage available to dependents or coverage is NOT offered to dependents.
            •  As is noted in the IRS Form 1095C Instructions definition of dependent, a spouse is not a dependent for purposes of section 4980H. 


            Series 2 Codes - Form 1095C Line 16:

            Code

            What does the code mean?

            When to use the code

            2A

            Employee not employed for any day during the calendar month.

            Employee was not employed on any day of the month. 

             

             Do not use code 2A if they were an employee on any day of the month.

             

             Do not use code 2A if the employee was terminated that month.

            2B

            Employee not a full-time employee for the calendar month.

             Employee is not a full-time employee and did not enroll in MEC, if offered for the month.

             

             Employee is a full-time employee and the offer of coverage or enrollment ended before the last day of the month because the employee terminated during the month.

            The offer or enrollment in coverage would have continued for the month had the employee not terminated.

             

            Reference 2D if the employee is in their initial measurement period and not full-time.

            2C

            Employee enrolled in coverage offered.

             Enter code 2C if the employee was enrolled for the entire month regardless of whether any other code in Series 2 might also apply.

             

            Exceptions to when you would NOT use Code 2C are listed after this table - Code Series 2 Exceptions. 

            2D

            Employee is in a measurement period.

             

            (section 4980H(b) Limited Non-Assessment Period)

             If an employee is in an initial measurement period for the month - use 2D and not 2B even if the employee is not a full-time employee.

             

             For an employee in a measurement period and if your company is also eligible for the multiemployer interim rule relief for the month, enter code 2E not code 2D.

            2E

            Multiemployer interim rule relief.

             2E is used for any month for which the multiemployer arrangement interim guidance applies, regardless of whether any other code in Code Series 2 (including code 2C) might also apply.

             

            For guidance regarding Multiemployer Arrangements, please see page 17 in the IRS 1094C/1095C Instructions.

            2F

            Form W-2 safe harbor - Section 4980H affordability.

             W-2 safe harbor method was used to determine affordability for this employee for the year. 

             

             If the W2 safe harbor method is used for an employee, it must be used for all months of the calendar year for which the employee is offered coverage.

            2G

            Federal Poverty Line safe harbor - Section 4980H affordability.

             The federal poverty line safe harbor was used to determine affordability for this employee for any month(s).

            2H

            Rate of Pay safe harbor - Section 4980H affordability.

             The Rate of Pay safe harbor was used to determine affordability for this employee for any month(s).

            ---

            A note about the Affordability Safe Harbor Codes 2F, 2G & 2H

             An affordability safe harbor code should not be entered on line 16 for any month that you did not offer MEC to at least 95% of your full-time or FTE employees and their dependents.

             

             In your EHX Company Data for your 1094C, you have indicated if MEC was offered for all 12 months or not; 

             

             If MEC was not offered for all 12 months and/or you selected NO for any month(s), do not use safe harbor Codes 2F, 2G or 2H for those months marked NO for MEC on your 1094C.

             

            For more information, see the IRS instructions for Form 1094C, Part III, column (a).

            2I

            Reserved

            Code not used for 2016 reporting year


            Code Series 2C Exceptions - DO NOT USE 2C IF:
            •  Do not enter code 2C in line 16 for any month in which the multiemployer interim rule relief applies (enter code 2E)For guidance regarding Multiemployer Arrangements, please see page 17 in the IRS 1094C/1095C Instructions.
            • Do not enter code 2C in line 16 if code 1G is entered in line 14. 
            • Do not enter code 2C in line 16 for any month in which a terminated employee is enrolled in COBRA continuation coverage or other post-employment coverage (enter code 2A). 
            • Do not enter code 2C in line 16 for any month in which the employee enrolled in coverage that was not minimum essential coverage (MEC). 




            Contact the Efficient Hire ACA Team with any questions or issues!




            This document is not meant to provide legal advice - it is only for your reference.

            Consult an attorney if you have questions regarding your 1094C/1095C IRS Forms.


            Updated: 16 Jan 2019 03:39 AM
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