The arrival of a new year marks the time to begin preparing annual 1095-C filings with the IRS and select state governments.
Fortunately for employers, there aren’t any new 1095-C codes for the 2022 tax year. Still, with so many codes to choose from, understanding which to use and when can be challenging. To ensure your organization files accurately this year, we’ve provided a reminder on the different coding options for lines 14 and 16 on the 1095-C form below.
Coding options for Line 14
1A: Communicates 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: Indicates individual received an offer of coverage that met MEC and MV; communicates that offer of health coverage was extended only to employee and not their spouse or dependents.
1C: Communicates that the employee and their dependents received an offer of coverage that meets MEC and MV, but not the employee’s spouse.
1D: The 1D code communicates employee and spouse received an offer of coverage that meets MEC and MV, but not dependents.
1E: Confirms the employee, their dependents, and spouse received an offer of health coverage that meets MEC and MV. In addition, the code may indicate that offer of coverage was not affordable or was affordable under W-2 or Rate of Pay safe harbors.
*1F: This code communicates that the offer of coverage made to the employee only meets MEC and not MV.
1G: Indicates offer of health coverage to a non-full-time employee. These employees don’t require offers of coverage under the ACA’s Employer Mandate and aren’t included in the IRS penalty assessment. Be sure to classify workers correctly.
*1H: This code communicates there was no offer of coverage, OR that the offer of coverage did not meet MEC standards.
1J: 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: 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.
1L: Communicates offer of individual coverage HRA to the employee with affordability determined using the employee’s primary residence ZIP code.
1M: The 1M code confirms an offer of an individual coverage HRA to the employee and their dependent(s). This code relies on the use of the employee’s primary residency zip code to calculate affordability.
1N: The 1N code on the other hand communicates that the employee, spouse, and their dependent(s) received an individual coverage HRA, with affordability determined using the employee’s primary residency ZIP code.
1O: Similar to the 1L code in that employee receives an individual coverage HRA, but the 1O calculates affordability using the employee’s primary employment location ZIP code.
1P: Communicates employee and dependents (but not spouse) received an individual coverage HRA; employee’s primary employment location ZIP code calculates affordability.
1Q: The 1Q code communicates that the employee, spouse, and dependents received an individual coverage HRA, with affordability set using the employee’s primary employment location ZIP code.
1R: Communicates individual coverage HRA offered to employee; employee and spouse or dependent(s); or employee, spouse, and dependents is not affordable.
1S: Confirms offer of individual coverage HRA to an individual that is not a full-time employee.
1T: The 1T code should be used when an individual and spouse, but not dependents, receive an HRA offer of coverage, with the affordability determined using the employee’s primary residence ZIP code.
1U: Use the 1U code when an individual and spouse, but not dependents, receive an HRA offer of coverage with affordability calculated using the employee’s primary employment site ZIP code.
*Codes marked with an asterisk could expose employers to IRS penalty risk
Coding options for Line 16
Line 14 codes only provide a partial picture of an individual’s healthcare coverage for the reporting year. Below are the different line 16 ACA codes employers can use for the 2022 tax year.
2A: Indicates the employee was not employed. The 2A code is typically seen accompanied by a 1H code on line 14.
2B: Indicates employee was not full-time and did not enroll in MEC. Typically used for full-time employees who terminate their employment and had coverage expire before the end of the month.
2C: The 2C code should be used if the employee enrolled in the coverage offered, regardless of whether the coverage complied with the ACA requirements.
2D: Enter the 2D code on line 16 if the employee is in a Limited Non-assessment Period (LNAP) and their ACA status has not yet been determined.
2E: Indicates multi-employer relief and is typically used if some portion of the workforce is unionized and has an established multi-employer plan.
2F: The 2F code communicates that the coverage offered meets the W-2 safe harbor for determining affordability. 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: Indicates coverage offered meets the Federal Poverty Line safe harbor for determining ACA affordability.
2H: Indicates coverage offered meets the Rate of Pay safe harbor for determining ACA affordability.
Coding 1095-C forms can be a complex task. With the IRS bolstering enforcement activity and ending good-faith transition relief, employers should take extra precautions to ensure accurate ACA filings for 2022.
If you need assistance coding your 2022 ACA 1095-C forms, contact Trusaic for help. We can validate your data, analyze your workforce composition, determine employee healthcare eligibility, and complete your filing and furnishing requirements for you. In addition, Trusaic can represent your filings in the event of an IRS audit, and ensure you are 100% ACA compliant. Contact us to learn more.
For more information on how to code 1095-C forms, download the Employer’s Guide to Coding ACA Form 1095-C below.
To gain invaluable insights on penalty amounts, affordability percentages, filing deadlines, expert tips for responding to penalty notices, and proven strategies for minimizing IRS penalty risk, download the ACA 101 Toolkit.