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Home ACA Compliance 1095-C Codes for the 2021 Tax Year

1095-C Codes for the 2021 Tax Year

5 minute read
by Chris Arey

It’s 2022 and time to begin preparing the annual 1095-C filings with the IRS and select state governments. Are you ready?

If you need a refresher on the different 1095-C coding options for this year, we’ve got you covered. Below are all of the different coding options for Line 14 of the 1095-C Form.

1A: The 1A code communicates that the individual received a Qualifying Offer, which is an offer of Minimum Essential Coverage (MEC) that provides Minimum Value (MV) and is affordable under the Federal Poverty Line (FPL), and the individual’s spouse and dependents received at least MEC.

1B: While similar to the 1A code, the 1B code indicates the individual received an offer of coverage that met MEC and MV. A 1B code communicates to the IRS that the offer of health coverage was only extended to the employee and not their dependents. A 1B code could expose employers to potential ACA penalty exposure.

1C: A 1C code communicates that the employee and their dependents received an offer of coverage that meets MEC and MV, but not the employee’s spouse.

1D: A 1D code communicates that the employee and their spouse received an offer of coverage that meets MEC and MV but not their dependents.

1E: The 1E code confirms the employee, their dependents, and spouse received an offer of health coverage that meets MEC and MV. While similar to the 1A code, the 1E code may indicate that the offer of coverage was not affordable, or was affordable under the W-2 or Rate of Pay safe harbors

1F: The 1F code communicates to the IRS that the offer of coverage made to the employee only meets MEC. It’s important to note that the 1F code doesn’t meet MV, and therefore could expose your organization to IRS penalty risk.

1G: A 1G code indicates an offer of health coverage to a non-full-time employee. Technically, these employees don’t require offers of coverage under the ACA’s Employer Mandate and therefore aren’t included in the IRS penalty assessment. Be sure to classify workers correctly!

1H: This code communicates one of two things to the IRS. One, there was no offer of coverage, or two, that the offer of coverage was not MEC. 

1L: The 1L code communicates the offer of an individual coverage HRA to an employee with the affordability determined using the employee’s primary residence ZIP code.

1J: The indicates an offer of MEC that met MV to the employee and a conditional offer of MEC to the employee’s spouse, but not their dependents.

1K: This code confirms an offer of MEC that meets MV to the employee and at least MEC to the employee’s dependents, as well as a conditional offer of MEC to the employee’s spouse. 

1M: Similar to the 1L code, the 1M code confirms the offer of an individual coverage HRA to the employee and their dependent(s). Use the employee’s primary residency zip code to calculate affordability.

1N: The 1N code tells the IRS that the employee, their spouse, and dependent(s) received an individual coverage HRA, with the affordability determined using the employee’s primary residency ZIP code.

1O: The 1O code is similar to the 1L code in that the employee receives an individual coverage HRA, but the affordability for the 1O code is determined by using the employee’s primary employment location ZIP code.

1P: The 1P code tells the IRS the employee and their dependents, but not their spouse, received an individual coverage HRA. The employee’s primary employment location ZIP code calculates affordability.

1Q: A 1Q code communicates to the IRS that the employee, their spouse, and dependents received an individual coverage HRA, with the affordability set using the employee’s primary employment location ZIP code.

1R: 1R codes communicate that the Individual coverage HRA offered to the employee; employee and spouse or dependent(s); or employee, spouse, and dependents is NOT affordable.

1S: The 1S code confirms the offer of an individual coverage HRA to an individual that is not a full-time employee.

1T: The 1T code is new this year and applies to HRAs. Use it when an individual and their spouse, but not their dependents, receive an HRA offer of coverage, with the affordability determined using the employee’s primary residence ZIP code.

1U: Similar to the 1T code, and also new this year, the 1U also applies to HRA coverage and is new to the 2021 tax year. Use the 1U code when an individual and their spouse, but not their dependents, receive an HRAoffer of coverage with the affordability calculated using the employee’s primary employment site ZIP code. 

If you need assistance applying these codes to the 1095-C forms this year, download the Employer’s Guide to Coding ACA Form 1095-C below to learn best practices for minimizing ACA penalty risk and complying with the healthcare law.

Download Employer's 1095-C Guide

It’s important to remember that the line 14 codes only tell half of an individual’s healthcare coverage for the reporting year. Employers must also apply codes on line 16 of the 1095-C form. Below are the different options 

2A: The 2A code indicates that the employee was not employed and is typically seen accompanied by a 1H code on line 14.

2B: The 2B code generally means that an employee was not full-time and did not enroll in MEC. You can also use the 2B code for full-time employees who terminate their employment and had coverage expire before the end of the month.

2C: If the employee enrolled in the coverage offered, regardless of whether the coverage complied with the ACA requirements, use the 2C code.

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2D: If an employee is in a Limited Non-assessment Period or “LNAP” and their ACA status has not yet been determined, use the 2D code.

2E: The 2E code indicates multi-employer relief. This code is typically used if some portion of the workforce is unionized and has an established multi-employer plan.

2F: The 2F code indicates the coverage offered meets the W-2 safe harbor for determining affordability. Please note that if you use the W-2 safe harbor, it is the only safe harbor code you can use for a particular employee for the specific reporting year.

2G: The 2G code indicates that the coverage offered meets the Federal Poverty Line safe harbor for determining ACA affordability.

2H: The 2H code indicates that coverage offered meets the Rate of Pay safe harbor for determining ACA affordability.

There’s a lot to know when it comes to coding the 1095-C forms. With the IRS ramping up ACA Employer Mandate non-compliance enforcement and no more good-faith transition relief, getting it right matters more than ever. Contact us to learn about our full-service ACA compliance solutions.

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For information on ACA penalty amounts, affordability percentages, important filing deadlines, steps for responding to penalty notices, and best practices for minimizing IRS penalty risk, download the ACA 101 Toolkit.

Summary
1095-C Codes for the 2021 Tax Year
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1095-C Codes for the 2021 Tax Year
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It’s 2022 and time to begin preparing the annual 1095-C filings with the IRS and select state governments. Are you ready?
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The ACA Times
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Short URL of this page: https://acatimes.com/ttw
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