IRS Form 1094-C, Part II – ALE Member Information only has 3 line items. One of these is Line 22 – Certifications of Eligibility (Offer Methods). This line is a very important part to get right. It may look confusing, but it’s actually pretty simple!
22. Certifications of Eligibility
This line designates if the employer can use one (or more) of the specified offer methods. The check boxes for this line item are as follows:
- A. Qualifying Offer Method
- B. Reserved
- C. Reserved
- D. 98% Offer Method
Please note: there are four check boxes for this line, but only two of them are in use. Both B and C were previously used in 2015 and are no longer available.
Out of the two remaining methods, employers can check one, both, or neither of these boxes. It just depends which method, if any, apply!
A. Qualifying Offer Method
For employers to be eligible to use the Qualifying Offer Method, the employer must certify that it made a Qualifying Offer to one or more of it’s full-time employees for all months in which they were an employee.
As a reminder, these three conditions must be satisfied for an offer of coverage to count as a Qualifying Offer:
- The employee must be offered minimum essential coverage (MEC) that provides minimum value (MV).
- The employee’s spouse and children must also be offered MEC.
- The lowest-cost, self-only plan that is offered to the employee must cost less than 9.5% (as annually adjusted) of the single mainland Federal Poverty Level (FPL).
If the employer can certify that they met all of these conditions, then they can check the box “A. Qualifying Offer Method.”
D. 98% Offer Method
For employers to be eligible to use the 98% Offer Method, the employer must:
- Offer MEC to at least 98% of its full-time employees (and their dependents) for all months in which they were employees and not in a waiting period.
- Offer coverage to at least 98% of it’s full-time employees that is both affordable and provides minimum value.
- File the 1095-C forms with the IRS and provide a copy to each applicable employee by the deadline.
If the employer can certify that they met all of these conditions, then they can check the box “D. 98% Offer Method.”
When employer’s use the 98% Offer Method, they do not need to complete the Form 1094-C, Part III – (b) Section 4980H Full-Time Employee Count for ALE Member.
Employers may choose to use one of these methods to show that they are offering exceptionally affordable coverage to their employees. It’s recommended to check one (or both) of these boxes if they apply.
Review our Essential Guide: Mastering Form 1094-C to learn more about completing Form 1095-4 or download our Understanding Form 1095-4 guide PDF below.
BoomTax, The Boom Post, and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors prior to engaging in any transaction.