ACA Year-End Reporting
The Affordable Care Act (ACA) mandate requires Applicable Large Employers to file forms 1094-C and 1095-C as part of the year-end filing. These forms are crucial for demonstrating compliance with ACA requirements and ensuring that employees receive the necessary information about their health coverage. In some cases, small employers with self-funded plans will need to file 1094-B/1095-B. It is essential to consult with your insurance provider for guidance on whether this is necessary. Properly completing and submitting these forms helps avoid potential penalties and ensures that all reporting requirements are met accurately and efficiently.
Form 1094-C
This form is filed with the IRS along with a copy of the 1095-C forms. This can be viewed as the coversheet for the 1095-C forms being submitted to the IRS. The 1094-C form contains information about the employer, including FT employee count by month, total employee count by month, and certification of offer of coverage by month.
Form 1095-C
Form 1095-C is used to report information about each employee's health insurance coverage. Employers must complete this form for each employee who were full-time for one or more months during the calendar year, detailing the coverage offered, the months the employee was covered, and the employee's share of the lowest-cost monthly premium. This form must be filed to the IRS on behalf of the employee as well as furnished to the employees for confirmation of their coverage. The tracking of employees' full-time or part-time status throughout the year is crucial for accurately completing these forms.
Form 1095-C contains three parts:
- Part 1 – Basic Employee and Employer demographics information (name, SSN, Tax ID etc.).
- Part 2 – Monthly Offer of Health Coverage information pertaining to the specific employee (was coverage offered to this employee, the type of coverage offered, the employee contribution requirements etc.).
- Part 3 – Covered individuals. This part is only applicable for employers with a self-funded insurance plan.
For the majority of employers, Part 2 of the 1095-C is the section which will require the most attention. As mentioned above, this section contains monthly information pertaining to the offer of coverage for the particular employee.
Part 2 - Form 1095-C
Below is a screenshot of Part 2 of Form 1095-C. Any employee who was full-time for at least one month during the calendar year should receive a 1095-C form containing information about the offer of coverage available.
Line 14: Offer of Coverage – In this line the employer will enter one of the IRS predefined series 1 codes (offer of coverage info by month). All months must be populated with a code. If the same code applies to all 12 months, then the code can be entered in the “All 12 Months” column. Nothing in this line indicates if the employee actually enrolled in coverage. This line only discusses the offer of coverage.
Line 15: Employee Required Contribution – In this line the employer would enter the employee’s cost of Self-only coverage for the plan offered to the employee, even if the employee didn’t elect any coverage. If multiple plans are offered, then the offer of lowest cost should be entered (even if the employee elected a higher cost plan). This line may not always be applicable.
Line 16: Applicable Safe Harbor Codes – In this line employers will enter one of the IRS predefined series 2 codes (by month). This line can be viewed as providing more details and explanation to line 14. For example, if code 1H is entered on line 14 indicating that no offer of coverage was made for the given month, then on line 16 the employer would enter one of the IRS predefined codes (if applicable) explaining the reason for not offering coverage (i.e. Code 2A for Employee was not employed during the given month). This line will not always be applicable. If the same code applies to all 12 months, then the code can be entered in the “All 12 Months” column.
Form 1095-C Line 14 Codes
Below is a table explaining the IRS codes for line 14 of form 1095-C. Important to note, an offer of coverage is considered to have been made for a month only if the employees is eligible for coverage from the first day of the month to the last day of the month.
| IRS Code | Description | Additional Information |
| 1A | Qualifying Offer: The employee was offered a minimum essential coverage plan, providing minimum value, and the employee contribution for self-only coverage is not greater than 8.83% of the single federal poverty line (as adjusted yearly). This includes the employee's spouse and dependents with the minimum essential coverage offer as well. | Good offer. Although this code includes spouse coverage, employers are NOT required under the ACA guidelines to offer spouse coverage. Employers may offer coverage to employee and dependents only (and not spouse) and in return use one of the other IRS line 14 codes. Additionally, if code 1A applies there is no need to fill in line 15. |
| 1B | The employee was offered a minimum essential coverage plan, providing minimum value, but offered to employee only. | Not a good offer as it doesn’t provide dependent coverage. |
| 1C | The employee was offered a minimum essential coverage plan, providing minimum value, AND at least minimum essential coverage offered to dependents (but not spouse). | Can be a good offer (as employers are not required to offer spouse coverage) as long as the employee contribution towards the self-only coverage meets the IRS affordability guidelines. |
| 1D | The employee was offered a minimum essential coverage plan, providing minimum value, AND at least minimum essential coverage offered to spouse (but not dependents). | Not a good offer as it doesn’t provide dependent coverage. |
| 1E | The employee was offered a minimum essential coverage plan, providing minimum value, AND at least minimum essential coverage offered to dependents and spouse. | Can be a good offer as long as the employee contribution towards the self-only coverage meets the IRS affordability guidelines. This code differs from code 1A in that the employee contribution towards the self-only coverage is higher than 8.83% of the single federal poverty line (as adjusted yearly). The employer would indicate on line 15 the employee contribution amount and on line 16 the affordability method used. |
| 1F | The employee was offered a minimum essential coverage plan but NOT provided minimum value. | Not a good offer as it doesn’t provide minimum value. |
| 1G | Offer of coverage to employee who was not a full-time employee for any month of the calendar year, and who enrolled in self-insured coverage for one or more months of the calendar year | Applicable for self-insured plans |
| 1H | The employee was NOT offered coverage for the given month (employee not offered any health coverage, or employee was offered coverage that is not minimum essential coverage). This may include months in which the employee was not employed. | This code doesn't necessarily represent a negative factor. The employer would indicate on line 16 the reason (if available) for not offering the coverage. There can be a good reason for not offering. For example, the employee was not employed during the given month, or the employee was not FT during the given month. |
| 1I | Reserved | Reserved |
| 1J | Minimum essential coverage providing minimum value offered to employee and at least minimum essential coverage conditionally offered to spouse; minimum essential coverage not offered to dependent. | Not a good offer as it doesn’t provide dependent coverage. |
| 1K | Minimum essential coverage providing minimum value offered to employee; at least minimum essential coverage offered to dependents; and at least minimum essential coverage conditionally offered to spouse. | Can be a good offer as long as the employee contribution towards the self-only coverage meets the IRS affordability guidelines |
Form 1095-C Line 16 Codes
Below is a table explaining the IRS codes for line 16 of form 1095-C:
| IRS Code | Description | Additional Information |
| 2A | Employee not employed during the month. | Enter code 2A if the employee was not employed during the calendar month. This code would work In conjunction with line 14 code 1H (no offer of coverage). This code would explain the reason for not offering coverage for the given month. Do not use this code for a month in which the individual was an employee on any day of the calendar month (i.e. EE was hired mid-month or terminated mid-month). |
| 2B | Employee was not full time for the given month, or the employee coverage ended mid-month due to the employee termination. | This code would work In conjunction with line 14 code 1H (no offer of coverage). This code would explain the reason for not offering coverage for the given month. |
| 2C | The employee enrolled in the coverage offered. | Enter code 2C for any month in which the employee enrolled in the offered health coverage. Use this code before any other codes that may apply (with the exception of code 2E or if code 1G was used in line 14). |
| 2D | The employee is in a section 4980H(b) Limited Non-Assessment Period. |
This code would work In conjunction with line 14 code 1H (no offer of coverage). This code would explain the reason for not offering coverage for the given month. Use this code if the reason for not offering the coverage for the given month is due to the employee being in a non-assessment period. For instance, the first three months after an employee first becomes a full-time employee may be treated as a limited non-assessment period if all applicable conditions are met. Another example of a non-assessment period would be a variable employee during the measurement or administrative period. |
| 2E | Multi-employer interim rule relief. | In some cases, employers with a Multiemployer plan (i.e. Union) can enter on line 14 1H for no offer of coverage and on line 16 2E for Multiemployer interim rule relief. |
| 2F | The employer is using the W2 wages Safe Harbor to calculate/determine the plan affordability. | This code would be used in conjunction with one of the line 14 codes which indicate an offer of coverage (i.e. 1E) |
| 2G | The employer is using the Federal Poverty Line Safe Harbor to calculate/determine the plan affordability. | This code would be used in conjunction with one of the line 14 codes which indicate an offer of coverage (i.e. 1E) |
| 2H | The employer is using the Rate of Pay Safe Harbor to calculate/determine the plan affordability. | This code would be used in conjunction with one of the line 14 codes which indicate an offer of coverage (i.e. 1E) |
| 2I | Reserved | Reserved |
Form 1095-C Example 1
- FT Employee hire date – 10/1/2019
- Coverage offer date – 1/1/2020
- Coverage offered to – Employee, dependents, and spouse
- Employee monthly contribution towards the lowest self-only coverage - $150.00
- The employee elected coverage
Since all 12 months have the same code, the employer is able to enter information in only the "All 12 Months" column. Line 14 is coded as 1E for coverage offered to employee, dependents and spouse. Line 15 is coded with the employee contribution amount of $150.00 toward the lowest self-only coverages. Line 16 is coded as 2C because the employee enrolled in the coverage.
Form 1095-C Example 2
- FT Employee hire date - 2/15/2020
- Coverage offer date - 5/1/2020
- Coverage offered to – Employee, dependents, and spouse
- Employee monthly contribution towards the lowest self-only coverage - Equals to or less than 8.83% of the federal poverty line (as adjusted yearly).
- The employee waived the offer of coverage
The column for January is coded as 1H in Line 14 for no offer and Line 16 is code as 2A since the employee not employed. Columns February through April are also coded as 1H in Line 14 for no offer but Line 16 is coded as 2D for Non-Assessment period given that the employee was just starting with the employer. Columns May through December are coded as 1A in Line 14 since the offer calls into the category of a "Qualifying Offer". Line 15 for these months is left blank and Line 16 is left blank as well given that the employee waived coverage.
Form 1095-C Example 3
- FT Employee hire date - 2/15/2020
- Termination date – 11/15/2020
- Coverage offer date - 5/1/2020
- Coverage offered to – Employee and dependents
- Employee monthly contribution towards the lowest self-only coverage - $110.00
- Plan affordability calculation method – Rate of pay
- The employee waived the offer of coverage
The column for January is coded as 1H in Line 14 for no offer and Line 16 is coded as 2A since the employee not employed. Columns February through April are also coded as 1H in Line 14 for no offer but Line 16 is coded as 2D for Non-Assessment period given that the employee was just starting with the employer. Columns May through October are coded as 1C in Line 14 since coverage was offered to the employee and dependents (but no spouse). For these months, Line 15 is lists $110.00 as the employee's contribution toward the lowest self-only coverage and Line 16 is coded as 2H for the affordability to be calculated based on rate of pay. The column for November is coded as 1H for no offer and Line 16 is coded as 2B since the coverage (along with the employee) was terminated mid-month. The column for December is coded as 1H in Line 14 for no offer and Line 16 is coded as 2A since the employee was not employed.
Additional Resources
Click the irs.gov links below for additional information in regards to employer responsibilities under the Affordable Care Act.
- IRS Employer Shared Responsibility Q&A
- IRS Employer Shared Responsibility Year-End Q&A
- IRS Form 1095-C
- IRS Form 1094-C
- IRS Forms 1094-C and 1095-C Instructions
For more information on how Empeon can assist with the ACA requirements, which includes the filing and furnishing of these year-end forms on your behalf, please refer to Empeon's article: Benefits: ACA Plan Setup.