The information contained in this document is intended as a guide and is not tax or legal advice. If you have questions, please contact your tax preparer or other trusted advisor when filing forms with the IRS.
Below is Form 1095-C from the IRS website. This guide will explain the form and help you determine the proper codes for the fields in Part II.
Parts I and III are comprised of lines 1-13 and 18-30, respectively. These sections are employee information and other covered individuals (if the employer-provided self-insured coverage).
Part II is made up of lines 14-17. This section uses two sets of codes released by the IRS to help employers have consistency when detailing the medical benefits they present to their employees. The codes are used to describe various coverages, offers and other helpful explanations to avoid penalties each month for the employee on the form.
Additionally, the most recent 1095-C now requires specific codes for employers offering individual coverage health reimbursement agreements (ICHRA), so you will see additional codes referenced here that you may have been previously unfamiliar with.
Here is a brief overview of ICHRA so you can determine if these codes apply to your organization:
What is Individual Coverage Health Reimbursement Arrangement (ICHRA)?
- An HRA is a type of account-based health plan that employers can use to reimburse employees for their medical care expenses
- An ICHRA is an HRA integrated with individual health insurance coverage or Medicare
o Requires employees and any covered dependents to be enrolled in individual health insurance coverage or Medicare in order to receive reimbursements for medical care expenses, including premiums
How does an ICHRA work?
- Employer sets an allowance amount for employees
- Employee buys health insurance policy
- Employee submits proof of purchase of medical expense
- Employer reimburses employee
Line 14 – Offer of Coverage
Line 14 specifies the type of coverage, if any, offered to an employee, spouse and dependents. The code must indicate the coverage the employee was offered; however, it may not match the coverage in which the employee is actually enrolled. For example, if an employee is offered family coverage but enrolls in employee-only coverage, Line 14 must indicate that the employee was offered family coverage. A code must be entered for each calendar month even if the employee was not a full-time employee for one or more months. Alternatively, the “All 12 Months” box may be completed if the same offer applies to all 12 months.
Line 14 Code Descriptions
Line 15 Entry
Line 17 Entry
Qualifying offer: Minimum Essential Coverage (MEC) providing Minimum Value (MV) offered to full-time employee, and at least MEC offered to spouse and dependents. Employee Required Contribution is $103.15 or less (for 2022 calendar year plans).
MEC providing MV offered to employee only.
MEC providing MV offered to employee and at least MEC offered to dependents (no spouse).
MEC providing MV offered to employee and at least MEC offered to spouse (no dependents). Do not use Code 1D if coverage for the spouse was offered conditionally. Instead, use Code 1J.
MEC providing MV offered to employee and at least MEC offered to dependents and spouse.If Employee Required Contribution is more than $103.15 and the year to 2022 calendar year plans, use Code 1E. Do not use Code 1E if coverage for the spouse was offered conditionally. Instead, use Code 1K.
Offer of MEC NOT providing MV was made to employee, or employee and spouse or dependents, or employee, spouse and dependents.
Offer of coverage to individual who was not a full-time employee for any
month and who enrolled in self-insured coverage for one or more months.
No offer of coverage to the employee, or the offer was not MEC.
MEC providing MV offered to employee and at least MEC conditionally offered to spouse; MEC not offered to dependents.
MEC providing MV offered to employee; at least MEC offered to dependents; and at least MEC conditionally offered to spouse.
Individual coverage HRA (ICHRA) offered to employee only with affordability determined by using employee’s primary residence ZIP code.
ICHRA offered to employee and dependents (no spouse) with affordability determined by using employee's primary residence ZIP code.
ICHRA offered to employee, spouse, and dependent with affordability determined by using employee’s primary residence ZIP code.
ICHRA offered to employee only using the employee’s primary employment site ZIP code affordability safe harbor.
ICHRA offered to employee and dependents (no spouse) using the employee’s primary employment site ZIP code affordability safe harbor.
ICHRA offered to employee, spouse, and dependents using employee’s primary employment site ZIP code affordability safe harbor.
ICHRA that is NOT affordable offered to employee; employee and spouse, or dependent(s); or employee, spouse and dependents.
ICHRA offered to an individual who was not a full-time employee.
Line 15 – Employee Required Contribution
Enter the amount of the Employee Required Contribution, which is, generally, the employee share of the monthly cost for the lowest cost, self-only minimum essential coverage (MEC) providing minimum value (MV) that is offered to the employee. This amount may not equal the amount the employee is actually paying for coverage. For example, an employee enrolls in family coverage with a monthly premium of $250.00. The monthly premium for employee-only coverage is $150.00 which is the amount that should be entered in Line 15. For an employee offered an individual coverage HRA (ICHRA), the Employee Required Contribution is the excess of the monthly premium for the applicable lowest cost silver plan based on the employee’s applicable age over the monthly ICHRA amount. For additional rules on determining the amount of the Employee Required Contribution, including cases in which an employer makes available certain cafeteria plan contributions, wellness program incentives, and opt-out payments, see Notice 2015-87.
Line 16 – Section 4980H Safe Harbor and Other Relief
Line 16 provides an opportunity for an employer to indicate an exception to a penalty. Completing this line is optional; however, it is in the employer’s best interest to provide the information if it is applicable.
Employee not employed during the month
Multiemployer interim rule relief
Employee not a full-time employee
Section 4980H affordability Form W-2 safe harbor
Employee enrolled in coverage offered
Section 4980H affordability federal poverty line safe harbor
Employee in a limited non-assessment period
Section 4980H affordability rate of pay safe harbor
If more than one code applies to Line 16, use the following guidelines:
- If 2E and any other Code Series 2 applies, enter 2E
- If 2C and any other Code Series 2 applies other than Code 2E, enter 2C. (Exception: Do not enter code 2C when a terminated employee is enrolled in COBRA or other post-employment coverage; enter 2A.)
- If 2B and 2D apply, enter 2D
Line 17 – Zip Code
If the employer offers an ICHRA to an employee, enter the appropriate ZIP code used for identifying the lowest cost silver plan used to calculate the Employee Required Contribution in line 15. This will be the ZIP code of the employee’s residence (code 1L, 1M, or 1N) or the ZIP code of the employee’s primary site of employment if the employer used the work location safe harbor (code 1O, 1P, or 1Q).
Location safe harbor for ICHRAs. An employer may use the cost of self-only coverage for the lowest cost silver plan for the employee for self-only coverage offered through the Exchange where the employee’s primary site of employment is located for determining whether an offer of an ICHRA to a full-time employee is affordable.
*Wurk does not provide tax, legal or accounting advice. This document has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.