ACA Reporting Advisor

Welcome to MSEC’s weekly ACA FAQ on reporting. While details on how to complete IRS forms 1094 and 1095 (such as what codes to use on specific lines of the form) will not be covered, general questions on reporting requirements will be answered. For detailed information on form completion, contact your tax advisor, payroll company, or insurance carrier. If you have a general ACA reporting question, email it to aca@msec.org. The information provided herein is general in nature. These materials are not to be construed as the rendering of legal or management advice. If the reader has a specific need or problem, please consult with a member of our professional staff in either the Human Resource Services or Employment Law Services departments of MSEC. The most commonly asked questions will be answered in this forum. In addition, the Health Care Reform Learning Zone, found on the MSEC website (msec.org), is a rich source of information about the Affordable Care Act (ACA).

Q:  How do I report on form 1095-C an offer of coverage to a full-time employee who declined the offer?

If Line 14 indicates that the employer made an offer of minimum value coverage to the employee, an offer of minimum essential coverage to the employee’s dependent children, (using code 1C or 1E) and one of the affordability safe harbors applies (Line 16), then no potential penalty will apply for the employee who declined coverage.

The affordability safe harbor codes are 2F, 2G, or 2H and are used on Line 16 of form 1095-C.* They are an indication to the IRS that you believe no penalty should apply since this employee was offered minimum value coverage that met one of the safe harbors for affordability.

These codes designate which affordability safe harbor the employer is using. In each case, the lowest employee cost of self-only minimum value coverage (as reported on Line 15) is compared to:

  • W-2 wages for code 2F; or
  • Federal poverty line for code 2G; or
  • The employee’s rate of pay for code 2H.

For an explanation of the Safe Harbor options, see the MSEC Health Care Reform Learning Zone at this link:

https://www.msec.org/memberhome/benefits/HCRLZ/employermandate-part2/SitePages/Default.aspx

*This assumes that the multi-employer arrangement interim guidance does not apply.