The IRS has created two sets of Affordable Care Act (ACA) codes to provide employers with a consistent way to describe their medical benefit offerings to their employees. Each code indicates a different scenario regarding an offer of coverage, or explains why an employer should not be subject to a penalty for an employee, for each month.
ACA 1095 codes cheat sheet
Form 1095-C: Line 14 - Code Series 1
Code Series 1 is used for Line 14 of Form 1095-C and addresses:
- Whether an individual was offered coverage
- What type of coverage was offered
- Which months that coverage was offered
If an employee is benefit eligible in any month during the year, then line 14 should include a value for each month, even during months where an employee is not/no longer employed.
Important Note Regarding Affordability: References to affordability relate to affordability at the employee-only coverage level. It does not matter if the employee elects coverage for him or herself and a spouse or dependent. The IRS is only concerned with what the employee would have to pay if he or she elected coverage for him or herself alone.
*Offer of Coverage: An offer of coverage is one that provides coverage for every day of a calendar month. There is an exception for terminated employees who would have been covered for the entire month, if not for the termination.
Form 1095-C: Line 16 - Code Series 2
Code Series 2 is used for Line 16 for Form 1095-C and address:
- Whether the individual was employed and, if so, whether he or she was full-time or part-time
- Whether the employee was enrolled in coverage
- Whether the employer is eligible for transition relief as an employer with a non-calendar year plan or as a contributor to a union health plan
- Whether coverage was affordable and, if so, based on which IRS safe harbor
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The information in this blog post is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own counsel.