By Jennifer Carsen, JD, Legal Editor

Employers with 50 or more full-time employees, including full-time equivalent employees (FTEs), in calendar year 2015 are required to fill out Forms 1094-C and 1095-C. In Part 1 of this article, I explained 1095-C reporting and filing requirements in detail. Here, I provide tips for filling out specific lines of the form.

While the 1095-C can seem monumentally complex—and, make no mistake, it can be—the trick to mastering it is taking it month by month. Rather than looking at 2015 as a single entity, for 1095-C purposes it’s more helpful to view it as 12 separate month-long compartments. For each of those months, the IRS needs to know what offer (if any) of health coverage you made to each of your full-time employees.

Some tips:

Line 14: Offer of coverage

• For each calendar month, enter the appropriate code from Code Series 1.
• You are considered to have offered coverage for a month only if that offer is good for every single day of that month. An offer made on the second day of a month, for example, does not count.
• An employee who terminates coverage before the end of a month (due to, for example, termination of employment) does not actually have an offer of coverage for that month, so the appropriate code is 1H.
• A code must be entered for each month, January through December, even if an employee was not a full-time employee for one or more of those months.
• If an employee is not actually offered coverage for a given month, enter Code 1H.
• Consolidated Omnibus Budget Reconciliation Act (COBRA)
• An offer of COBRA coverage upon employment termination does not count as an Affordable Care Act (ACA)-qualifying offer of coverage. For that month, for that employee, you would enter Code 1H.
• An offer of COBRA coverage to an active employee (for example, an employee whose hours have been reduced to the point of ineligibility for regular plan coverage) is treated and coded the same as an offer of that same type of coverage to any other active employee. Depending on the specific coverage offered, it may or may not meet the ACA’s minimum standards for affordability and value.

Line 15: Employee share of lowest-cost monthly premium

You fill in this part only if you’ve used code 1B, 1C, 1D, or 1E anywhere in Line 14 (whether for 1 or more months, or all 12). These four codes all reference an offer of coverage that satisfies the ACA in terms of minimum value provided; Line 15 is meant to determine whether or not you’ve satisfied the affordability requirement.

• Enter the amount of the employee share of the lowest-cost monthly premium for self-only minimal essential coverage providing minimum value that is offered to the employee. (Note that the IRS wants a monthly amount, not a per-pay-period amount, so you may need to do some recalculating.)
• Enter the exact amount, including any cents—if you have a calendar-year plan, you can divide the employee’s share of the plan year by 12 to get this number.
• If the employee is offered coverage but is not required to contribute anything towards the premium, enter “0.00”; don’t leave the box blank.

Line 16: Safe harbors

Ah, the safe harbors—helpful yet complicated. Line 16 comes into play for any month(s) in which:

• The employee was not employed with you
• The employee was not a full-time employee
• The employee enrolled in the minimum essential coverage offered
• The employee was in a limited nonassessment period (more on these below)
• Noncalendar year transition relief applied to the employee
• You (the employer) met one of the affordability safe harbors with respect to this employee
• You (the employer) were eligible for multiemployer interim rule relief for this employee

As you may have surmised, more than one of these could conceivably apply to the same employee in a given month—but only one code can be used per month. There are two rules you need to remember in terms of code priority:

• If 2E (“Multiemployer interim rule relief”) applies, use 2E.
• If 2E does not apply but 2C (“Employee enrolled in coverage offered”) does, use 2C.

For other situations:

• 2A: Employee not employed on any day of the calendar month.
• 2A: Terminated employee is enrolled in COBRA coverage.
• 2B: Employee not full-time for the calendar month and did not enroll in minimum essential coverage, if offered, for the month.
• 2B: Employee was full-time for the month but his/her offer of coverage (or actual coverage, if the employee was enrolled), ended before the end of the month due to the employee’s termination of employment.
• 2B: Use for January 2015 if the employee was offered ACA-qualifying coverage (in terms of affordability and minimum value) no later than the first day of the first payroll period beginning in January 2015.
• 2D: Employee in Limited Non-Assessment Period. For employees in an initial measurement period, use 2D rather than 2B.
• 2F, 2G, and 2H: These refer to the three safe harbors for the affordability determination:
  
  • Form W-2 (if you use this safe harbor, you must use it for all months of the calendar year for which the employee is offered health coverage)
  • Federal poverty line
  • Rate of pay
• 2I: Noncalendar year transition relief applies to this employee. For example, relief during January, February, and March 2015 for an employer with a plan year starting April 1, 2015.

Lines 17-22: Covered Individuals

You complete this portion only if you offer employer-sponsored self-insured health coverage in which the employee or other individual enrolled. (For this purpose, employer-sponsored coverage does not include coverage under a multi-employer plan.)

This section could include a nonemployee director, a retired employee who retired in a previous year, a terminated employee receiving COBRA continuation coverage who terminated employment during a previous year, and a nonemployee COBRA beneficiary (not including an individual who obtained coverage through the employee’s enrollment, such as a spouse or dependent obtaining coverage when an employee elects COBRA continuation coverage that is family coverage; this person would be included on the Form 1095-C of the individual who enrolls in the coverage).

If the Form 1095-C is used with respect to an individual who was not an employee for any month of the calendar year, Part II must be completed by using code 1G in the “All 12 Months” box or the box for each month of the calendar year

What if you have two employees who are married to one another, or spouse and dependent? How do you code them?

If one employee enrolls in a coverage option under your plan that also covers the other employee(s)—for example, one employee spouse enrolls in family coverage that covers both the other employee spouse and their dependent child—enrollment information should be reflected on the Form 1095-C only for the employee enrolled in the coverage. The other family members would be reported as covered individuals.

Confused Yet?

While we’ve done our best to clearly explain some of the ins and outs of the 1095-C, it’s inherently a detailed, complicated form. It’s not entirely clear that the IRS gets this, however, as the agency estimates that it will take the average filer a mere 12 minutes to complete it. In a word: Ha!

More information is available in the 1094-C & 1095-C Q&A provided by the IRS, as well as in the filing instructions for both forms.

Employers can take some comfort in the fact that the IRS is using a “good faith” standard this year for the ACA reporting requirements and will not impose penalties on employers who fall short despite their best efforts.

And once the 2015 ACA reporting is under your belt, you have some time to take a breather and regroup before the 2016 reporting deadlines roll around. As Scarlett O’Hara put it so well, tomorrow is another day.

In my next article, I’ll explain the six situations that may qualify as Limited Non-Assessment Periods (LNAPs) for purposes of the play-or-pay penalties of the ACA.