Form 1095-C Codes Guidance – Master Code Series 1 & 2

Perhaps the most intimidating (and challenging) part of Form 1095-C codes for new filers is determining what they mean and how to use them for Box 14 and 16 of the 1095-C. The use of short 1 digit, 1 letter codes to express coverage, full-time/part-time status, and affordability is cryptic at best, so we’ve compiled the best resources to simplify this process as much as possible. Below, we have captured various coding scenarios in an interactive code guidance tool, as inline web site content, and as a downloadable PDF for use when you’re offline.

ACA Reporting 101 – Form 1095-C Codes Guidance PDF

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Form 1095-C Codes Box 14 – Series 1

The IRS requires that you complete Box 14 for each and every month of the year Jan-Dec. A short hand method to complete this is to fill in ‘All 12 Months’ as this is the same as copying the value over into each and every month.

Why is 1095-C Box 14 required for each month?

If an employee meets the eligibility guidelines for receiving health coverage under the ACA mandate, then the IRS requires that each and every month of Box 14 is completed. If an employee wasn’t employed or was part time for a given month you can indicate this with ‘1H‘ instead of trying to leave a month blank.

Why does 1095-C Box 14 exist?

This box allows you to tell the IRS if you’ve met the ACA guidelines, month-by-month for each employee. For the purposes of reporting, the IRS is primarily concerned with whether an offer of coverage that met the minimum guidelines was made. In many cases, employees will waive an offer of coverage, or they will enroll in a higher tiered, Silver level and higher insurance plans, and this does not affect Box 14 reporting.

In short, Form 1095-C Box 14 only indicates whether an affordable offer of coverage was made by the employer for employee only coverage, and this is independent of the coverage the employee opted-in to or if they waived coverage.

How does Form 1095-C Box 14 affect Box 15?

Form 1095-C Box 15 is used to indicate the employee’s share of the lowest cost, employee only plan offered by the employer. The codes you select for Box 14 will affect what you can enter for the corresponding months in Box 15.

If you think of your offer of coverage as range of values where ‘1A‘ indicates you made an offer of coverage for a given month that meets all of the ACA guidelines, and ‘1H‘ indicates that no offer of coverage was made, and the remaining codes fall somewhere in between where an offer is made, but it doesn’t totally meet all of the criteria dictated by the ACA mandates.

In the cases where you made an offer of coverage using code ‘1A‘, you must leave Box 15 of the corresponding month blank. Why? Because you are telling the IRS you’ve met all of the ACA guidelines with your offer, so the employee share is irrelevant. Similarly, a code of ‘1H‘ indicates no offer was made, so it wouldn’t make sense to get the employee share of the premium as there was no offer made.

Please note: There are a few other codes in which the IRS specifies that Box 15 should be left blank, these are: ‘1F,’ ‘1G‘, ‘1R‘, and ‘1S‘.

How does Form 1095-C Box 14 affect Box 17?

Form 1095-C Box 17 is used to indicate the ZIP code in which the employer determined affordability of certain ICHRA offers. Only certain Series 1 Codes are used to describe ICHRA offers, and most of these codes require a ZIP code entry in Box 17.

If the employer used code ‘1L‘, ‘1M‘, ‘1N‘, or ‘1T‘, then Box 17 should be completed with the ZIP code of the employee’s primary residence.

If the employer used code ‘1O‘, ‘1P‘, ‘1Q‘, or ‘1U‘, then Box 17 should be completed with the ZIP code of the employee’s primary work location ZIP code.

Employers without ICHRA offers do not need to complete Box 17 fields.

Series 1 ACA Codes Chart

 Description | When does this code apply?
1AQualifying Offer.
MEC providing MV offered to FTE with Employee Required Contribution equal to or less than 9.5% (as adjusted) of the mainland single FPL and at least MEC offered to spouse and dependents.
1BMEC providing MV offered to EE only.
Spouses and dependents excluded from offer.
1CSpouse excluded from offer.
MEC providing MV offered to EE and at least MEC offered to dependents (not spouse).
1DDependents excluded from offer.
MEC providing MV offered to EE and at least MEC offered to spouse (not dependents).
Note: If the spouse was conditionally offered coverage, use code 1J instead.
1EMEC providing MV offered to EE and at least MEC offered to dependents and spouse.
Note: If the spouse was conditionally offered coverage, use code 1K instead.
1FMEC not providing MV offered to EE; or EE, spouse, and/or dependents.
1GSelf-insured coverage offered to a non-employee individual, or to a non-FTE for any month of the year.
Note. Code 1G applies for the entire year or not at all.
1HNo offer of coverage.
EE not offered any health coverage or EE offered coverage that is not MEC.
Note: May include 1 or more months in which the individual was not an EE.
1JConditional Offer. MEC providing MV offered to EE and at least MEC conditionally offered to spouse; MEC not offered to dependents.
1KConditional Offer. MEC providing MV offered to EE; at least MEC offered to dependents; and at least MEC conditionally offered to spouse.

Series 1 ACA Codes Chart – ICHRA

 Description
1LIndividual coverage HRA (ICHRA) offered to employee (EE) only.
Affordability determined by using EE’s primary residence location ZIP code.
1MICHRA offered to EE and dependents (not spouse).
Affordability determined by using EE’s primary residence location ZIP code.
1N ICHRA offered to EE, spouse, and dependents.
Affordability determined by using EE’s primary residence location ZIP code.
1OICHRA offered to EEs only.
Using the EE’s primary employment site ZIP code affordability safe harbor.
1PICHRA offered to EE and dependents (not spouse).
Using the EE’s primary employment site ZIP code affordability safe harbor.
1QICHRA offered to EE, spouse, and dependents.
Using the EE’s primary employment site ZIP code affordability safe harbor.
1RICHRA that is NOT affordable offered to EE; EE and spouse, and/or dependents.
1SICHRA offered to an individual who was not an full time EE.
1T ICHRA offered to EE and spouse (not dependents).
Affordability determined using EE's primary residence location ZIP code.
1UICHRA offered to EE and spouse (not dependents).
Using EE's primary employment site ZIP code affordability safe harbor.

Form 1095-C Codes Box 16 – Series 2

In short, Form 1095-C Box 16 is your chance to explain to the IRS why an eligible offer of coverage wasn’t made. This section is also referred to by the IRS as ‘Section 4980H Safe Harbor’, and this is frequently shortened to just Box 16 Safe Harbors.

Is 1095-C Box 16 required?

Well no, 1095-C Box 16 is optional, BUT completing this when possible can drastically reduce your tax liability.

In short, Form 1095-C Box 16 is your chance to explain to the IRS why an eligible offer of coverage wasn’t made.

If you’ll recall from Box 14, we can indicate an offer of coverage was made that meets all of the minimum guidelines using code ‘1A‘. Since you’ve told the IRS your offer provides minimum essential coverage that provides minimum value, there is no need to provide a code for #16 OR an employee share in #15 since the 1A code indicates that it meets the affordability guidelines.

When should you complete 1095-C Box 16?

Form 1095-C Box 16 really comes into play where no offer of coverage was made, or if the offer of coverage falls within the gray area of not meeting affordability / dependent coverage requirements.

Ideally, Box 16 is used to indicate why an offer of coverage wasn’t made (maybe an employee was part time, wasn’t employed, was in a waiting period, or was enrolled in a union plan) or to define which affordability safe harbor was used (Form W-2 Safe Harbor, Federal Poverty Line Safe Harbor, or Rate of Pay Safe Harbor).

What happens if you don’t complete 1095-C Box 16?

Leaving Box 16 blank does not mean you will automatically receive an IRS penalty. If you are an employer that is required to offer health coverage under the ACA mandate, AND you didn’t offer coverage, or if the offer of coverage didn’t provide minimum value, or if the offer didn’t meet affordability guidelines, AND an employee goes onto the ACA healthcare marketplace to claim a premium tax credit, this could potentially trigger a Form 226-J penalty letter.

Series 2 ACA Codes Chart

 Description | When does this code apply?
2AThe employer did not employ this person for any day during the calendar month.
The employee was not yet hired.
The employee is no longer employed (terminated).
Note: Do not use code 2A for a month in which the individual was an employee for any day of the month.
2BThe employee was not full time for this month.
The employee is part time, seasonal, or variable hour.
The employee is in a measurement period and their FT status is not yet established (see code 2D).
The employee was terminated and is not offered coverage for the entire month of termination.
Note: If both code 2B and code 2D apply, then enter code 2D.
2D The employee was in a LNAP for the month.
The employee is in a waiting period under the Monthly or Look-Back measurement methods.
The employee is in an initial measurement period under the Look-Back measurement method.
The employee is in the first calendar month of employment and did not start on the first day of the month.
It is the employer’s first year as an ALE.
The employee had a change in status during their initial Look-Back measurement period.
The employee is in a non-assessment period (waiting period or initial measurement period).
Note: If both code 2B and code 2D apply, then enter code 2D.
2E The employer is eligible for the multi-employer interim relief rule.
Some portion of the employer’s workforce is eligible for a multi-employer (union) plan.
The employer made an ongoing contribution to the plan on behalf of the employees.
Note: If code 2E and any other Series 2 Code applies, enter code 2E.
2FThe coverage is affordable based on the Form W-2 safe harbor.
The employer used the W-2 safe harbor for every month that the employee is offered coverage.
Note: If an employer uses this code, then it must be used for all months of the calendar year in which the employee was offered coverage.
2GThe coverage is affordable based on the FPL safe harbor.
2HThe coverage is affordable based on the Rate of Pay safe harbor.

Interactive Form 1095 C Codes Guidance Tool

Create a free BoomTax account below (no credit card required), then simply answer ‘Yes’ or ‘No’ in the wizard interface to find the right code for almost any situation.

screenshot of form 1095-c codes guidance tool from boomtax.com
Sample of Form 1095-C Codes Guidance Tool

Form 1095-C Codes Next Steps

Now that we have a good grasp on what the Form 1095-C codes are, what they indicate, why they exist, and the rules behind using them, we can now put this into practice. Our comprehensive 1095-C examples break down common filing situations and provide several filled out 1095-Cs as an example for each scenario.

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