Post on 14-Jul-2020
Common 1095-C Scenarios Sentric
Introduction
Mike Petrasek
Customer Success Marketing Manager
Before We Begin – A Disclaimer
If you’re unsure then talk to your accountant or benefits broker.
Agenda
Resources Page Reminder
The Forms
Line 14
Line15
Line 16
Common Scenarios
Appendix
ACA Resources Reminder
After This Training
…You should:
• Know the Difference Between the Form 1094-C & 1095-C
• Understand Series 1 and 2 Code Groups
• Better understand a few of the most common uses of those codes
THE FORMS ACA Training
The Forms: Filing Deadlines
January 31, 2017
1095-C due to EE. If mailed, must be postmarked to that date.
February 28, 2017
1094-C and 1095-C are due to the IRS if filing by paper.
March 31, 2017
1094-C and 1095-C are due to the IRS if filing electronically.
The Forms
The Forms: 1094-C Part 1
The Forms: 1094-C Part 2
The Forms: 1094-C Part 4
The Forms: 1095-C
The Forms: 1095-C
It’s All About the Offer
The Forms: 1095-C Line 15
Only complete if line 14 code is: 1B, 1C, 1D, 1E, 1J or 1K.
The Forms: 1095-C Line 14
The Forms: 1095-C Line 14
According to the IRS: “…Series 1 indicator codes specify the type of coverage, if any, offered to an employee, the employee’s spouse, and the employee’s dependents.”
There are 11 types of Series 1 indicator codes…
The Forms: 1095-C Line 14 Series 1 Codes
1A 1E 1C 1G 1K
1B 1D 1F 1H 1J
Company Made A Qualifying Offer
Company Didn’t Make A Qualifying Offer
*Code 1I is no longer used.
• 1A MEC providing MV offered to full-time EE with contrib. equal to or less than 9.66% of mainland single federal poverty line and at least MEC offered to spouse and dependents. • 1C MEC providing MV offered to EE and at least MEC offered to dependents (not spouse). • 1E MEC providing MV offered to EE and at least MEC offered to dependents and spouse. Do not use 1E if offer to spouse was conditionally (1K). • 1G Offer of coverage to EE who was not full-time for any months and who enrolled in self-insured coverage for one or more months. • 1K MEC providing MV offered to employee; at least MEC offered to dependents; and at least MEC conditionally offered to spouse.
1095-C Line 14: The Company Made A Qualifying Offer
• 1B MEC providing MV offered to EE only. • 1D MEC providing MV offered to EE and at least MEC offered to spouse but not dependents. Do not use 1D if the coverage for the spouse was offered conditionally (1J). • 1F MEC not providing MV was made to EE; EE and spouse or dependents, or EE, spouse and dependents. • 1H No offer of coverage to the EE or the offer was not MEC. • 1J MEC providing MV offered to employee and at least MEC conditionally offered to spouse; MEC not offered to dependent(s).
1095-C Line 14: No Qualifying Offer
• If the employee was not employed during that month • If the employee was still in their limited non- assessment period
• If the employee was not full time every month of the year
Acceptable reasons why these codes may be used include:
1095-C Line 14: No Qualifying Offer
The Forms: 1095-C Line 16
What Does Safe Harbor Actually Mean?
Offered Affordable Coverage
…But Goes to the Marketplace Anyhow
IRS Acceptable Safe Harbor Reasons
• The EE was not employed or was not full time; • The EE enrolled in the MEC coverage offered; • The EE was in a limited non-assessment period with respect to
section 4980H; • The ALE member met one of the section 4980H affordability safe harbors with respect to his employee; or • The ALE member was eligible for multiemployer interim rule relief for this EE. There are 9 types of Series 2 indicator codes…
Clarify when an employee enrolled
in coverage
2C
Provide valid reasons why your company did not
offer coverage
2A 2B 2D
Show that your offer was
affordable – if employee declined coverage
2F 2G 2H
Indicate that the employee is part
of a multi-employer
agreement
2E
The Forms: 1095-C Line 16 Series 2 Codes
*Code 2I is no longer used.
1095-C Line 16: Code 2C
One code to rule them all…sort of.
• 2A Employee was not employed during the month. • 2B Employee is not a full-time employee. *Should be used for the month of termination. • 2D Employee is in a limited non-assessment period.
Provide valid reasons why your company did not offer coverage.
1095-C Line 16
1095-C Line 16
• 2F Section 4980H affordability Form W-2 safe harbor. • 2G Section 4980H affordability mainland federal poverty line (9.66% or $94.75) safe harbor. • 2H Section 4980H affordability rate of pay safe harbor.
Show that your offer was affordable – if employee declined coverage.
Line 16 Codes Explained: Group 4
Indicate that the employee is part of a multi-employer agreement.
• 2E Multi-employer interim rule relief and should always be paired with code 1H from Line 14.
A Few Red Flags
Top 3 Red Flag Scenarios
• Anything other than a code 1A and 1E on line 14.
• Roughly 80% of your employees should have a 1A or 1E but if you see some other codes, you should probably check your data.
• Blank line 16.
• Errors when generating forms.
• Good data is key. The bulk of your work with the ACA is going to be fixing bad data. Hire dates, term dates, plan start and end dates, enrollment dates, etc.
Let’s Look At a Few Examples
Example 1: Antonio – Accepted Coverage
Offered Plans:
• Plan A - $50/month
• Plan B - $150/month
• Plan C - $500/month
Line 14
• 1A
Line 15
• Blank
Line 16
• 2C
Example 2: Britney – Declined Coverage
Offered Plans:
• Plan A - $50/month
• Plan B - $150/month
• Plan C - $500/month
Line 14
• 1A
Line 15
• Blank
Line 16
• 2F – W2
• 2G – Federal Poverty Line
• 2H – Rate of Pay
Example 3: Ron – Started Mid-Year
Offered Plans:
• Plan A - $100/month
• Plan B - $150/month
Line 14
• Jan. – April = 1H
• May – Dec. = 1E
Line 15
• Jan. – April = Blank
• May – Dec. = $100
Line 16
• Jan. – April = 2A
• May – Dec. = 2C
Example 4: Jan – Terminated Mid-Year
Offered Plans:
• Plan B - $150/month
• Plan C - $250/month
Line 14
• Jan. – June = 1E • July – Dec. = 1H
Line 15 • Jan. – June = $150 • July – Dec. = Blank
Line 16 • Jan. – June = 2C
• July = 2B
• August – Dec. = 2A
Example 5: Doug – Union Employee
Offered Plans:
• Plan A - $75/month
• Plan B - $250/month
• Plan C - $750/month
Line 14
• 1H
Line 15
• Blank
Line 16
• 2E
APPENDIX ACA Training
Does offer provide Minimum Essential
Coverage (MEC)?
1F
Line 14 Codes: No Offer or Not Minimum Value
Does offer provide Minimum Value
(MV)?
YES
NO
No Offer of Minimum Essential
Coverage (MEC)
NO 1H
NO
START
FINISH
Is the offer considered
Affordable: ≤ 9.5% of mainland FPL?
Offered to EE only?
Offered to EE and dependents (not
spouse)?
Offered to spouse and dependents?
Line 14 Codes: Assumes Offer Provides MEC and MV
1A
1B
1C
1D
1E
Offered to EE and spouse (not
dependents)?
YES YES
The offer is not
considered Affordable: ≤ 9.5% of mainland FPL?
NO YES YES
YES
YES
YES
Offered to EE, spouse
and dependents?
NO
NO
NO
NO
FINISH
ST
AR
T
Offered to EE, dependents and at least conditionally offered to spouse?
Line 14 Codes: New Codes for 2016
1K
1J
Offered to EE and conditionally
offered to spouse but not
dependents?
The offer is not
considered Affordable: ≤ 9.5% of mainland FPL?
YES YES
YES
NO
FINISH
ST
AR
T
EE is enrolled but was NOT full time (FT) for any
month.
Offer to EE not FT & enrolled in self-insured coverage for 1 or more
months 1G
YES YES
Line 14 Codes: Self-Insured Employer with Non-FT EE
A few notes regarding self-insured coverage: • All employees who enroll in self-insured coverage must receive a Form 1095-C.
This includes non-full-time employees per the below scenario.
• Employers are required to complete all three parts of the Form 1095-C only for those employees who enrolled in self-insured coverage.
START FINISH
Was the EE employed on ANY day of the month?
2A
Line 16 Codes: Not Employed or Not Full-Time
NO
Was the EE full-time for the month? 2B
2D
YES
START
FINISH
NOT YET
Was the EE in a limited non-
assessment period*?
NO
YES
*A limited non-assessment period may include: an EEs initial measurement or associated administrative period, the first calendar month of employment or the period following a status change, among others. For a full list, review the IRS’s Form 1095-C instructions.
Is the EE enrolled in minimum
essential coverage offered?
2C
Is EE eligible for multi-employer interim relief rule?
Line 16 Codes: Assumes Full-Time Employee for the month
YES
NO
FINISH
ST
AR
T
Was the W-2 safe harbor method used?
2E
2F
2G
2H
Leave blank
YES
YES NO
NO
Was the federal poverty line safe harbor method used?
NO
Was the rate of pay safe harbor method used?
NO
No codes apply YES
YES
YES