Accurate 1095-C forms: A Primer

Truth is: The Affordable Care Act (ACA) reporting requirements are burdensome. Getting your 1095-Cs right can be stressful. Integrity Data’s Compliance team, in the trenches since 2012, has put together this primer to help you ensure you have accurate 1095-C forms.

Lines – Lines – Lines: What do they mean?

Line 14 – Offer of Coverage

Line 14 on the 1095-C form provides details of the coverage that was offered throughout the year, including:

• Whether or not health insurance was offered.
• The type of coverage that was offered.
• The months in which coverage was offered.

The code on line 14 may vary as to the quality of the coverage offering. A line 14 response is reported for each month of the year. Also, line 14 codes do not indicate what coverage the employee enrolled in, instead the codes indicate what coverage was offered to the employee. You can use a code that indicates coverage if the employee was offered coverage for every day of the month. If the offer of coverage was not good for every day of the month, 1H will be applicable.

*Line 14 does NOT indicate whether coverage was accepted. That information is reported on Line 16.

**In the above example, the employee had the same coverage available for the entire year, so the response is listed only once, at the top of the column. If the available coverage changed during the year, a separate response would be entered for each month. *Please review this KB article for detailed descriptions of each line 14 code.

Line 15 – Employee Required Contribution

Line 15 provides the amount of the employee required monthly contribution. The amount listed on line 15 may not be reflective of the medical plan cost that the employee actually enrolled in. This amount should represent the cost for the lowest-cost, self-only coverage offered to that employee.

Line 15 should only be populated if line 14 has a code of 1B, 1C, 1D, 1E, 1J or 1K. If one these codes is listed in the “All 12 Months” column on line 14, there should also be a line 15 entry for all 12 months as well. If line 14 does not have one of these codes for any given month(s), line 15 should be left blank for that month. *Please review this KB article for additional details on line 15.

Line 16 – Eligibility

Line 16 provides information about the employees’ eligibility for health coverage and the coverage status for each month of the calendar year. Similar to line 14, a coverage code can only be used if the employee was actually enrolled for every day of the month. Otherwise, a different code will need to be used.

*Please review this KB article for detailed descriptions of each line 16 code.

Part III – Covered Individuals

Part III is only required to be populated by employers with self-insured health plans. Therefore, if your plan is fully-insured, this section will not be populated. This section should list the employee and all of their covered dependents during the calendar year. If the individuals were covered all 12 months, there should be an “X” in column (d). Unlike Part II, if the individuals were not covered all 12 months, but were covered at least one day during any given calendar month, there will be an “X” in the corresponding month(s).

Most Common 1095-C Coverage Scenarios

Full-Time Employee: Enrolled All Year

In this example, the employee was offered & enrolled in a minimum essential coverage plan with minimum value for all twelve months AND the lowest-cost, self-only plan cost increased in the month of June due to it being a mid-year plan.

• Line 14 - Code 1E is used in this example because MEC coverage providing MV was offered to the employee, spouse and dependents.
• Line 15 - Should show the employee share of the monthly cost for the lowest-cost, self-only coverage.
• Line 16 - Code 2C should be used because the employee elected coverage.

Full-Time Employee: Waived Coverage All Year

In this example, the employee was offered coverage at the beginning of the plan year (i.e. January) and chose to waive the offer of coverage.

• Line 14 - Code 1E is used in this example because MEC coverage providing MV was offered to the employee, spouse and their dependents.
• Line 15 - Although the employee waived coverage in this example, the employees’ monthly share of the lowest-cost self-only coverage offered still must be populated.
• Line 16 - Code 2F is used because the employee waived coverage and the employer is using the W-2 safe harbor to determine plan affordability.

Newly Hired Designated Full-time Employee: Waiting Period Applies

In this example, the full-time employee, expected to work more than 30 hours per week, was hired on May 5th and is eligible for coverage at the first of the month following date of hire (i.e. June 1st). The employee chose to enroll herself and dependents in the self-funded plan.

• Line 14 - Code 1H (No Offer of Coverage) is used for the months the employee was not employed. Code 1E is used during the months that the employee became eligible for coverage and MEC coverage providing MV was offered to the employee, spouse and dependents.
• Line 15 - The employees’ monthly share of the lowest-cost self-only coverage offered only needs to be populated for the months the employee was eligible for coverage.
• Line 16 - Code 2A is used for the months the employee was not employed. Code 2D is used for the month that the waiting period applied. Code 2C is used for the months that the employee was enrolled in coverage.

Full-Time Employee Enrolls in “Qualifying Offer” Plan

In this example, a full-time employee was hired on April 15th and was offered a “Qualifying Offer” plan upon completing the waiting period. So the employee was eligible to enroll on the first of the month following 30 days (i.e. June 1st). The 1095-C form should be coded as follows:

• Line 14 - Code 1H (No Offer of Coverage) is used during the months the employee was not employed. Code 1A (Qualifying Offer) is used during the months that the employee was eligible for the “Qualifying Offer” plan.
• Line 15 - No amount needs to be listed since Code 1A is used on Line 14.
• Line 16 - Code 2A is used for the months the employee was not employed. Code 2D is used for the months that the waiting period applied. Code 2C is used for the months that the employee was enrolled in coverage.

Part-Time Employee Moves to Full-Time Position

In this example, a part-time employee was promoted to full-time benefit eligible position on August 10th with coverage starting first of the month following 30 days. After completing the waiting period, the employee chose to enroll in benefits as of October 1st.

• Line 14 - Code 1H (No Offer of Coverage) is used for the months the employee was not eligible for coverage. Code 1E is used during the months that the employee was eligible for coverage.
• Line 15 - The employees’ monthly share of the lowest-cost self-only coverage offered only needs to be populated for the months the employee was eligible for coverage.
• Line 16 - Code 2B is used for the months that the employee was part-time. Code 2D is used for the month(s) that the waiting period applied. Code 2C is used for the months that the employee was enrolled in coverage.

Eligible Employee Elects Coverage Mid-Year

In this example, a full-time eligible employee hired on February 1st was eligible for coverage starting March 1st and chose to waive coverage upon completing the waiting period in March. However, the employee got divorced on May 15th, which is considered a qualifying event, and chose to enroll herself and her children in the company’s self-funded plan effective June 1st.

• Line 14 - Code 1H (No Offer of Coverage) is used during the months the employee was not employed/not eligible for coverage. Code 1E is used during the months that the employee was eligible for coverage and MEC coverage providing MV was offered to the employee, spouse and dependents.
• Line 15 - The employees’ monthly share of the lowest-cost self-only coverage offered only needs to be populated for the months the employee was eligible for coverage.
• Line 16 - Code 2A is used for the months that the employee was not employed. Code 2D is used for the month(s) that the employee was in a Limited Non-Assessment Period and the waiting period applied. Code 2H (Rate of Pay Safe Harbor) is used for the months that the employee waived coverage. Code 2C is used for the months that the employee was enrolled in coverage.

*Please note that code 2C is not used in May because the employee did not get divorced until May 15th. Since the employee was not enrolled in coverage for every day of the month of May code 2C cannot be used.

Terminated Employee

In this example, a full-time employee was enrolled since the beginning of the plan year (i.e. January 1st), and then ended their employment with the company on August 15th. Coverage terminates on the day of termination.

• Line 14 - Code 1E is used for the months that the employee, spouse and dependents were eligible for MEC coverage providing MV. Code 1H is used for the months in which the employee was no longer employed, thus there was no offer of coverage.
• Line 15 - The employees’ monthly share of the lowest-cost, self-only coverage offered only needs to be populated for the months the employee was eligible for coverage.
• Line 16 - Code 2C is used for the months that the employee was enrolled in coverage. Code 2A is used for the months the employee was not employed.

** Please note that the employee will not have a coverage code on lines 14 or 16 in this example, because coverage terminated mid-month. Therefore, the employee was not covered for every day of the calendar month.

Employee Elects COBRA upon Termination **Self-Insured Plans Only**

In this example, the full-time employee terminated their employment in July and COBRA was offered to the employee, spouse and dependents. The employee enrolled in COBRA starting in August and remained on COBRA for the remainder of the calendar year. The form example below would also apply to an employee who continued coverage as a retiree.

• Lines 14/15/16 - The codes will be identical to that of a regular terminated employee (see example above).
• Part III - This section should indicate which months the employee and/or dependents were enrolled in the employer’s health plan and COBRA. The “Covered All 12 Months” box is checked because the employee was enrolled in the employer’s medical plan from January –July, then immediately elected COBRA in August and remained on COBRA through the end of the year. Therefore, the employee was enrolled in coverage all twelve months. Please see example below:

* COBRA only needs to be reported by employers with self-funded health plans.

Employee Terminated in Prior Year – Enrolled in COBRA All Year **Self-Insured Plans Only**

In this example, an employee terminated their employment in 2017 and elected COBRA. This employee has remained enrolled in COBRA for all twelve months of 2018. The form example below would also apply to an employee who continued coverage as a retiree:

• Line 14 - Code 1G (Offer to Non-Employee). * Code 1G applies for the entire year or not at all.
• Line 15 - Should be blank.
• Line 16 - Should be blank.
• Part III - Should be completed for each enrollee. Keep in mind that this section must be completed for non-employees as well.

Employee Enrolled in Union-Sponsored Plan

In this example, the employee was enrolled in a medical plan that is 100% administered by the union:

• Line 14 - Code 1H (No Offer of Coverage). This code is used because the Union is actually offering the plan, not the employer.
• Line 15 - Should be blank.
• Line 16 - Code 2E (Multi-employer Interim Rule Relief).

Variable Hour Employee Completes IMP and Becomes Eligible for Coverage

In this example, a newly hired variable hour employee averaged over 30 hours per week during their Initial Measurement Period. There was no waiting period, the employee was eligible first of the month following the completion of the IMP.

• Line 14 - Code 1H (No Offer of Coverage) is used during the months the employee was in an IMP. Code 1E is used starting the month the employee is enrolled in coverage.
• Line 15 - The employees’ monthly share of the lowest-cost, self-only coverage offered only needs to be populated for the months the employee was eligible for coverage.
• Line 16 - Code 2D is used during the months employee was in the IMP, Code 2C is used starting the month the employee is enrolled in coverage.

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