Let’s Look At The Most Common 1095-C Coverage Scenarios

Let’s Look At The Most Common 1095-C Coverage Scenarios

KB14-087

Please review the most common coverage scenarios below.

Full-Time Employee: Enrolled All Year

In this example, the employee was offered & enrolled in a minimum essential coverage with minimum value for all twelve months AND the lowest-cost, self-only plan cost increased in the month of June due to it being a mid-year plan.

  • Line 14- Code 1E is used in this example because MEC coverage providing MV was offered to the employee, spouse & dependents.
  • Line 15- Should show the employee share of the monthly cost for the lowest-cost, self-only coverage.
  • Line 16- Code 2C should be used because the employee elected coverage.
     

Full-Time Employee: Waived Coverage All Year

In this example, the employee was offered coverage at the beginning of the plan year (i.e. January) and chose to waive the offer of coverage.

  • Line 14- Code 1E is used in this example because MEC coverage providing MV was offered to the employee & their spouse/dependents.
  • Line 15- Although the employee waived coverage in this example, the employees’ monthly share of the lowest-cost self-only coverage offered still must be populated.
  • Line 16- Code 2F is used because the employee waived coverage and the employer is using the W-2 safe harbor to determine plan affordability.

 

Newly Hired Designated Full-time Employee: Waiting Period Applies

In this example, the full-time employee, reasonable expected to work more than 30 hours per week, was hired on May 5th and is eligible for coverage first of the month following date of hire (i.e. June 1st). The employee chose to enroll herself & dependents in the self-funded plan.

  • Line 14- Code 1H (No Offer of Coverage) is used for the months the employee was not employed. Code 1E is used during the months that the employee became eligible for coverage & MEC coverage providing MV was offered to the employee, spouse & dependents.
  • Line 15- The employees’ monthly share of the lowest-cost self-only coverage offered only needs to be populated for the months the employee was eligible for coverage.
  • Line 16- Code 2A is used for the months the employee was not employed. Code 2D is used for the month that the waiting period applied. Code 2C is used for the months that the employee was enrolled in coverage.

 

Full-Time Employee Enrolls in “Qualifying Offer” Plan

In this example, a full-time employee was hired on April 15th & was offered a “Qualifying Offer” plan upon completing the waiting period. So the employee was eligible to enroll on the 1st of the month following 30 days (i.e. June 1st). The 1095-C form should be coded as follows:

  • Line 14- Code 1H (No Offer of Coverage) is used during the months the employee was not employed. Code 1A (Qualifying Offer) is used during the months that the employee was eligible for the “Qualifying Offer” plan.
  • Line 15- No amount needs to be listed since Code 1A is used on Line 14.
  • Line 16- Code 2A is used for the months the employee was not employed. Code 2D is used for the months that the waiting period applied. Code 2C is used for the months that the employee was enrolled in coverage.

 

Part-Time Employee Moves to Full-Time Position

In this example, a part-time employee was promoted to full-time benefit eligible position on August 10th with coverage starting first of the month following 30 days. After completing the waiting period, the employee chose to enroll in benefits as of October 1st.

  • Line 14- Code 1H (No Offer of Coverage) is used for the months the employee was not eligible for coverage. Code 1E is used during the months that the employee was eligible for coverage. 
  • Line 15- The employees’ monthly share of the lowest-cost self-only coverage offered only needs to be populated for the months the employee was eligible for coverage.
  • Line 16- Code 2B is used for the months that the employee was part-time. Code 2D is used for the month(s) that the waiting period applied. Code 2C is used for the months that the employee was enrolled in coverage. 

 

Eligible Employee Elects Coverage Mid-Year

 In this example, a full-time eligible employee hired on February 1st was eligible for coverage starting March 1st & chose to waive coverage upon completing the waiting period in March. However, the employee got divorced on May 15th, which is considered a qualifying event, and chose to enroll herself and her children in the company’s self-funded plan effective June 1st.

  • Line 14- Code 1H (No Offer of Coverage) is used during the months the employee was not employed/not eligible for coverage. Code 1E is used during the months that the employee was eligible for coverage & MEC coverage providing MV was offered to the employee, spouse & dependents. 
  • Line 15- The employees’ monthly share of the lowest-cost self-only coverage offered only needs to be populated for the months the employee was eligible for coverage.
  • Line 16- Code 2A is used for the months that the employee was not employed. Code 2D is used for the month(s) that the employee was in a Limited Non-Assessment Period & the waiting period applied. Code 2H (Rate of Pay Safe Harbor) is used for the months that the employee waived coverage. Code 2C is used for the months that the employee was enrolled in coverage.
    * Please note that code 2C is not used in May because the employee did not get divorced until May 15th. Since the employee was not enrolled in coverage for every day of the month of May code 2C cannot be used.

 

Terminated Employee

In this example, a full-time employee was enrolled since the beginning of the plan year (i.e. January 1st), and then ended their employment with the company on August 15th. Coverage terminates on the day of termination.

  •  Line 14- Code 1E is used for the months that the employee, spouse & dependents were eligible for MEC coverage providing MV.  Code 1H is used for the months in which the employee was no longer employed, thus there was no offer of coverage.
  • Line 15- The employees’ monthly share of the lowest-cost, self-only coverage offered only needs to be populated for the months the employee was eligible for coverage.
  • Line 16- Code 2C is used for the months that the employee was enrolled in coverage. Code 2A is used for the months the employee was not employed.
    ** Please note that the employee will not have a coverage code on lines 14 or 16 in this example, because coverage terminated mid-month. Therefore, the employee was not covered for every day of the calendar month.

 

Employee Elects COBRA upon Termination **Self-Insured Plans Only**

In this example, the full-time employee terminated their employment in July and COBRA was offered to the employee, spouse & dependents. The employee enrolled in COBRA starting in August and remained on COBRA for the remainder of the calendar year. The form example below would also apply to an employee who continued coverage as a retiree.

  •  Lines 14/15/16- The codes will be identical to that of a regular terminated employee (see example above).
  • Part III- This section should indicate which months the employee and/or dependents were enrolled in the employer’s health plan and COBRA. The “Covered All 12 Months” box is checked because the employee was enrolled in the employer’s medical plan from January –July, then immediately elected COBRA in August and remained on COBRA through the end of the year. Therefore, the employee was enrolled in coverage all twelve months. Please see example below:

* COBRA only needs to be reported by employers with self-funded health plans.

Employee Terminated in Prior Year – Enrolled in COBRA All Year **Self-Insured Plans Only**

In this example, an employee terminated their employment in 2017 & elected COBRA. This employee has remained enrolled in COBRA for all twelve months of 2018. The form example below would also apply to an employee who continued coverage as a retiree:

  • Line 14 – Code 1G (Offer to Non-Employee). * Code 1G applies for the entire year or not at all
  • Line 15- Should be blank
  • Line 16- Should be blank
  • Part III- Should be completed for each enrollee. Keep in mind that this section must be completed for non-employees as well 

 

Employee Enrolled in Union-Sponsored Plan

In this example, the employee was enrolled in a medical plan that is 100% administered by the union:

  • Line 14 – Code 1H (No Offer of Coverage). This code is used because the Union actually offering the plan, not the employer.
  • Line 15- Should be blank.
  • Line 16- Code 2E (Multiemployer Interim Rule Relief
     

Variable Hour Employee Completes IMP and Becomes Eligible for Coverage

In this example, a newly hired variable hour employee averaged over 30 hours per week during their Initial Measurement Period. There was no waiting period, the employee was eligible first of the month following the completion of the IMP.

  • Line 14 – Code 1H (No Offer of Coverage) is used during the months the employee was in an IMP. Code 1E is used starting the month the employee is enrolled in coverage.
  • Line 15- The employees’ monthly share of the lowest-cost, self-only coverage offered only needs to be populated for the months the employee was eligible for coverage.
  • Line 16- Code 2D is used during the months employee was in the IMP, Code 2C is used starting the month the employee is enrolled in coverage

 

**For More Information: KB14-086 “1095-C Form Review-Line 14, 15, 16 & Part III”

 

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Last Review: 10/17/2017 – Revision: 1.0

Applies To: ACA Compliance Solution

Categories:  Year End – 1095-C and Filing, Import of Data

Keywords: 1095-C, Codes

2018-10-17T08:11:43+00:00October 16th, 2018|0 Comments

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