ACA Code 1A alert: IRS clarifies 1095-C guidance for a Qualifying Offer

ACA Code 1A alert: IRS clarifies 1095-C guidance for a Qualifying Offer

Content updated June 5, 2018

With so many 1095-C codes to remember; it can be difficult to be informed on what codes best suit your coverage offering. We will explain the Qualifying Offer code 1A and when it is applicable. We will also discuss the advantages to using it.

What is Code 1A-Qualifying Offer?

ACA Code 1A Alert_Integrity Data ACA Compliance Solution

To enlarge, please click the image.

Code 1A (Qualifying Offer) is one of ten code options for Line 14 on the 1095-C form. Employers can use code 1A on line 14, if their medical coverage meets the ACA definition of a Qualified Offer.

How do I know if our Coverage is considered a Qualifying Offer?

As detailed by IRS instructions for Form 1095-C, a Qualifying Offer is:

  1. Minimum essential coverage …
  2. providing minimum value …
  3. offered to full-time employees …
  4. with the employee contribution for self-only coverage equal to or less than 9.56% of the mainland single Federal Poverty Line …
  5. and at least minimum essential coverage offered to the spouse and dependent(s).

Therefore, in order for an employer to use the Qualifying Offer code on the 1095-C form:

  • The coverage offered to a full-time employee must be Minimum Essential Coverage (MEC) providing Minimum Value (MV).
  • The employee’s contribution for self-only coverage must be equal to or less than 9.56% (for 2018) mainland single federal poverty line.
  • The MEC must be offered to the spouse and dependent(s) of the employee.

Also, Qualifying Offer code 1A can be used for any month or all months.

Advantages to Using Qualifying Offer Code 1A

Using Qualifying Offer code 1A on the 1095-C form does offer employers the following advantages:

  1. If the employer uses Code 1A for a month, it must not complete line 15 for that month.
  2. When the employer uses Code 1A for a month, completion of line 16 is optional, even if the employee is enrolled in coverage.
  3. If the employer makes a Qualifying Offer for all 12 months of the calendar year, and the employee was not enrolled in an employer sponsored, self-insured plan; they are NOT required to provide the employee with a 1095-C form. Instead, the employer can use an alternative method by providing the employee a statement which must include:
    • Employer/ALE Member name, address and EIN
    • Contact name and telephone number at which the employee may receive information about the offer of coverage and the information on the Form 1095-C filed with the IRS for that employee.
    • Notification that, for all 12 months of the calendar year, the employee and his or her spouse and dependents, if any, received a Qualifying Offer & therefore are not eligible for a premium tax credit.
    • Information directing the employee to see Pub. 974, Premium Tax Credit (PTC), for more information on eligibility for the premium tax credit.
      Qualifying Offer 1A

      To enlarge, please click the image.

Please remember that employers are not required to use the alternative method of furnishing Form 1095-C. They can choose to provide the employee with a 1095-C and use the alternative method of completing the form.

Please review the IRS Instructions for additional details on the Qualifying Offer Code 1A and alternative methods for completing & furnishing form 1095-C.

Keep on top of ACA reporting matters

  • Join our next webinar featuring our ACA solution – a robust, quick-to-deploy system that accepts data from every ERP and payroll system.
  • Contact a member of our sales team.

 

 

Leave A Comment