In the last post (https://affordablebookkeepingandpayroll.com/aca-reporting-answers-part-1/), I shared some information on which employees should receive forms 1094 which reports insurance coverage for full-time employees. Today’s blog shares how to report offers of coverage and enrollment information.
1. How should an ALE member report whether an offer of coverage was made to an employee for a calendar month?
The ALE member uses line 14, Offer of Coverage, in Part II of Form 1095-C to report whether an offer of coverage was made to an employee for each month of the year. An offer of coverage is considered to have been made for a month only if the coverage offered would provide coverage for every day of that month. The ALE member should enter the appropriate indicator code to indicate what type of coverage, if any, was offered to the employee for that month (for example, employee-only coverage, employee and dependents coverage, employee, spouse and dependents coverage, etc.).
2. How should information about the offer of coverage for the month in which an employee is hired be reported on Form 1095-C?
For the first month of employment, the ALE member should report that the employee was not offered coverage for that first month by entering code 1H, No offer of coverage, on line 14 (unless the offer of coverage extended to every day of that month). Note, however, that the ALE member may be entitled to relief from section 4980H liability for that month. For instance, the first three months after an employee first becomes a full-time employee may be treated as a limited non-assessment period if all applicable conditions are satisfied, which would be reported as code 2D, Employee in a section 4980H(b) Limited Non-Assessment Period, on line 16. On Part III of Form 1095-C, an ALE member should report an individual as having coverage under the plan for the calendar month if the individual was covered for any day of the calendar month.
3. How should information about the offer of coverage for the month in which an employee terminates employment be reported on Form 1095-C?
An ALE member reports that an employee was offered coverage for a month under Part II of Form 1095-C only if the offer of coverage would provide coverage for all days of the calendar month. Accordingly, if an employee terminates employment [with an ALE member] on any day other than the last day of a month and the coverage or offer of coverage expires upon termination of employment, the ALE member should report that the employee was not offered coverage for that final month of employment by entering code 1H, No offer of coverage, on line 14. If the coverage or offer of coverage would have continued if the employee had not terminated employment during the month, the ALE member will be eligible for relief under section 4980H for that employee’s last month of employment. In that case, the ALE member should enter code 2B, on line 16 for that month.
4. Is an ALE member required to enter a code in line 16, Applicable Section 4980H Safe Harbor, of Form 1095-C?
No. An ALE member is not required to make an entry on line 16 of Form 1095-C. However, an ALE member can use line 16 to indicate whether the ALE member qualifies for an exception from the assessable payment under section 4980H(b) for a given month. An ALE member should enter the appropriate code on line 16 if any applies.
5. How should an employer report enrollment information for self-insured coverage provided to an individual who was not an employee on any day of the calendar year, such as a non-employee COBRA beneficiary (for example, the former spouse of an employee), member of the board of directors, or retired employee?
An employer that sponsors a self-insured health plan may report enrollment information for individuals who were not employees on any day of the calendar year by entering code 1G, Offer of coverage to employee who was not a full-time employee for any month of the calendar year, on line 14 of Part II of Form 1095-C for all twelve months and completing Part III of Form 1095-C.
6. How does an ALE member complete its authoritative transmittal Form 1094-C and Form 1095-C if the ALE member is eligible to use the Qualifying Offer method?
If an ALE member has made a Qualifying Offer for all 12 months of the year to one or more full-time employees (and the employee did not enroll in self-insured coverage), the ALE member may use an alternate reporting method for those employees who received a Qualifying Offer for all 12 months of the year. A “Qualifying Offer” is an offer that satisfies all of the following criteria:
- an offer of minimum essential coverage that provides minimum value;
- the employee cost for employee-only coverage for each month does not exceed 9.5 percent of the mainland single federal poverty line divided by 12; and
- an offer of minimum essential coverage is also made to the employee’s spouse and dependents (if any).
On the Form 1094-C, Line 22 Certifications of Eligibility, the ALE member should check box A, Qualifying Offer Method. On Form 1095-C, line 14, the ALE member should enter code 1A, Qualifying Offer, for each employee receiving a Qualifying Offer for all 12 months of the year. When an employee receives a Qualifying Offer, no entry is required in line 15, Employee share of Lowest Cost Monthly Premium for Self-Only Minimum Value Coverage.
The Form 1095-C must be filed with the IRS; however, as an alternative to furnishing the employee with a copy of Form 1095-C filed with the IRS, the employer may furnish a statement containing certain information and stating that because the employee received a Qualifying Offer for all 12 months of the year, the employee is not eligible for the premium tax credit.
7. How does an ALE member complete its authoritative transmittal, Form 1094-C and Form 1095-C if the ALE member is using the 98 percent offer method?
An ALE member that, for all months of the calendar year, has offered affordable health coverage providing minimum value to at least 98% of its employees for whom it is filing a Form 1095-C employee statement, and offered minimum essential coverage to those employees’ dependents, may qualify for simplified reporting procedures. Note that for purposes of the 98% offer method, an offer to an employee’s spouse is not required. If an ALE member is using this method, it should check box D, 98% Offer Method, on line 22 of Form 1094-C.
For more information, see the IRS Instructions for filing forms 1094-C and 1095-C https://www.irs.gov/pub/irs-prior/i109495c–2015.pdf.
