10 Common Mistakes for IRS Form 1095-C

There are many common mistakes that filers make when completing Forms 1095-C. We’ve compiled a list of the most common mistakes and how to fix them.

Common Mistakes

Only creating and sending forms to individuals that enrolled in coverage

Common Mistake: Many filers assume that a Form 1095-C should only be completed for individuals that were enrolled in coverage. This could not be further from the truth.

Fix: Complete a Form 1095-C for all individuals that were full-time for at least one month of the year. According to the ACA definition of full-time employee, this should be any individual that had 130 hours of service or more in a month.

If the employer offered self-insured coverage, then a Form 1095-C should also be completed for any other employees that enrolled in the offered coverage.

Inputting data for only employed months

Common Mistake: Many filers think they they only need to complete the form for the months in which the individual was employed. However, this is not the case.

Fix: The IRS requires that a Form 1095-C must be completed for all eligible employees and that data must be entered for all 12 months of the year.

Using enrollment info instead of offer info on Line 14

Line 14 is used to show the offer of coverage made to eligible employees throughout the year.

Common Mistake: When completing Line 14 of Form 1095-C many filers end up using codes that don’t indicate the offer of coverage that was made, but try to find a code that matches the type of coverage that the employee enrolled in. This can potentially be very bad as an employer doesn’t want to tell the IRS that they excluded dependents or didn’t offer coverage if that’s not the case.

Fix: It’s important to only use the code for the offer of coverage and not for the plan in which the employee enrolled.

Using 1H if an employee waived coverage on Line 14

Line 14 is used to show the offer of coverage made to eligible employees throughout the year. Code 1H should only be used in instances that the employee was not offered coverage at all.

Common Mistake: Filers often get confused due to the fact that the IRS does not provide a code to indicate that an employee waived coverage. Many times a waived offer will get coded as 1H (no offer of coverage) which is very different from waived coverage.

Fix: The filer should always indicate the type of coverage that was offered, even if the employee did not enroll.

We have a Common 1095-C Coverage Scenarios Example list that can be used to learn more about these common coding scenarios.

Using amount employee actually paid on Line 15

Line 15 is used to show the employee required contribution (ERC) for the lowest-cost, self-only plan that was offered to them.
This should always be the lowest-cost, self-only ERC amount, even if the employee enrolled in a premium plan or enrolled other covered individuals.

Common Mistake: Filers will often input the amount that the employee actually paid, which can potentially be very bad. For example, if the employee had enrolled themself and 4 dependents, then the ERC amount will potentially be pretty high. This can make the offered coverage look unaffordable and could lead to fines and penalties.

Fix: It’s very important to only input the ERC for the lowest-cost, self-only plan to avoid these potential fines.

Not including applicable safe harbor codes on Line 16

Line 16 is used to show applicable safe harbor codes for each employee throughout the year.

There are codes to indicate the following:

• 2A – The individual was not an employee during this month
• 2B – The employee was not full-time for this month.
• 2C – The employee enrolled in the offered coverage
• 2D – The employee was in a waiting period.
• 2E – The employer is eligible for the multi-employer interim relief rule (union plans).
• 2F – The coverage is affordable based on the W-2 safe harbor.
• 2G – The coverage is affordable based on the Federal Poverty Line safe harbor.
• 2H – The coverage is affordable based on the Rate of Pay safe harbor.

Common Mistake: Many filers will leave Line 16 blank, since it’s technically not required to be completed. This should only be left blank if none of the codes apply for a calendar month.

Fix: This line is not required to be completed, but it is highly recommended by the IRS. Entering all applicable codes here (only one per month) could reduce potential liability for not offering coverage, not offering coverage that was affordable based on the employee’s household income, etc.

Learn more about the IRS codes using our code guidance PDF.

Including covered individuals info when not required

Form 1095-C, Part III – Covered Individuals should only be completed if the employer provided self-insured coverage in which at least one individual was enrolled in.

Common Mistake: Many filers will include information regarding the individuals that were covered on the offered plan. If a filer offered a fully insured health plan, then this data is not required.

Fix: If the employer did not provide self-insured coverage, then this section should be left completely empty.

Trying to check ‘yes’ for self-insured without any covered individuals info

The checkbox for Form 1095-C, Part III – Covered Individuals should only be checked if the employer is completing part III.

Common Mistake: Many employers that offer a self-insured plan try to check this box in Part III. This box should only be checked if there are any individuals that were enrolled in the offered self-insured plan.

Fix: If the employee or their dependents were not enrolled in a self-insured health plan for at least one day of the year, then this section should not be completed (including the checkbox).

Not including employee in covered individuals for a self-insured plan

Form 1095-C, Part III – Covered Individuals should be completed for every individual that was enrolled in a self-insured plan for at least one day.

Common Mistake: Many filers assume that since the employee information was already entered in previous sections of the 1095-C that the employee’s information does not need to be included in part III. This is not true.

Fix: All covered individuals, including the employee, should be included in Form 1095-C, Part III. If the employee was enrolled for at least one day, then they should be listed here as well as any other covered individuals, such as spouse or children.

Checking months in covered individual section for offered months instead of enrolled months

Form 1095-C, Part III – Covered Individuals should be completed for every individual that was enrolled in a self-insured plan for at least one day.

Common Mistake: Some filers think that they must check each month that the employee was offered coverage. This is not correct.

Fix: This section should only be completed for individuals that were enrolled in the offered self-insured plan. Filers should only check the box for the months that the individual was enrolled.

Key Takeaways

It’s extremely important that filers take time to review the IRS instructions and their data fully prior to submitting their filing to the IRS. This last review step can help avoid many common mistakes that are frequently made.

Learn all about Form 1095-C with our Essential Guide and become a master at your ACA filing. You can also download our ACA Essential Guide as a PDF to keep with you offline.

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