The IRS has released the draft Form 1095-C, which clarifies coding for coverage for COBRA. At the start of 2016, the FAQ section of the IRS site no longer provided information pertaining to COBRA continuation coverage. Undoubtedly, this was a source of frustration for those who went to the IRS site seeking answers on this issue but finding none.
Thankfully, the new instructions contained in the draft Form 1095-C explain in helpful detail how to code COBRA offers of coverage. As was the case in 2015, the draft instructions clarify that when coding an offer of COBRA coverage following a termination of employment, Code 1H is used in Line 14 and Code 2A is used in Line 16.
2015 methods of coding also remain in place when COBRA has been offered after an employee’s hours have been reduced – this offer would appear on Line 14 of Form 1095-C. Further clarification on how to code when spouses are/aren’t offered COBRA continuation coverage is also provided in the new draft instructions.
When spouse and dependents (e.g., children) are offered coverage, the coding is 1E (Line 14) and 2C (Line 15). In the event that an employee-only offer of COBRA coverage is made to an employee with reduced hours, the coding is 1B (Line 14). If they opt out of COBRA, the coding is 2B (Line 16); if they opt in, 2C (Line 16).
While these are just a few of the C-Series Forms changes for 2016 reporting, it’s important to note how to code which pertinent information. Please keep in mind that the foregoing examples are based on the draft Form 1095-C published by the IRS which should not be relied upon for filing. Final releases and instructions will be posted by the IRS.
For further questions, contact the IRS directly, as the FAQ section is not yet updated.