ACA Reporting Case Scenarios: How to Complete the 1095-C For a Full-time Employee Who Declines Coverage
If you have started down the worm-hole of completing your annual 1095-C statements, you’ve probably hit some confusion upon reaching Part II. With 9 coded options to plugin for each month of line 14 (1A-1I) and eight coded options for line 16 (2A-2H), things can start to get tricky.
The standard majority of cases are not the problems. Rather, it’s the odd-ball scenarios that generate the biggest stalls in 1095-C production, causing most to flee to google for guidance on their specific scenario. In this case, we will be looking at how a declined offer of coverage impacts the 1095-C.
At Benetech, we will be publishing a series of 1095-C case scenarios over the coming months as we enter into the first round of annual reporting. At the end of the blog will be the option to submit your specific 1095-C case that is causing you the most heartburn, and we’ll work on answering as much as we can in the coming months. The more you submit, the more we will research and write.
Scenario 4: Mary is a full-time employee at ABC Company. Her husband recently got a new job with better healthcare benefits, and they have decided that Mary and their children will be taking health coverage from her husband's plan in the following year. ABC Company holds their annual open enrollment in December for a January 1 plan start date, and is self-insured. ABC extended to Mary an offer of coverage that included her spouse and dependents. In December, Mary declined ABC Company's offer of Minimum Essential Coverage (MEC) for the upcoming plan year. ABC Company uses the rate of pay safe harbor for determining affordability.
This is how ABC Company will complete Mary's 1095-C:
Why? ABC Company is not obliged to enroll Mary in MEC that is affordable and provides minimum value, but is obliged under the ACA to extend a qualifying offer of coverage to Mary. In this case, ABC company extended an offer of coverage to Mary, her spouse, and her dependents for the entire year, and uses code 1E ( Minimum essential coverage providing minimum value offered to employee and at least minimum essential coverage offered to dependent(s) and spouse) from January-December of 2015.
In line 15, ABC Company includes the employee share of the premium for the lowest cost single coverage only plan that Mary is eligible for.
In line 16, had Mary accepted the offer of coverage, her code would have been 2C. Because she declined, the employer inserts the code for the applicable affordability safe harbor code, which in this case is 2H ( Section 4980H affordability rate of pay safe harbor. Enter code 2H if the employer used the section 4980H rate of pay safe harbor to determine affordability for purposes of section 4980H(b) for this employee for any month(s)).
Because Mary's information is uniform across the calendar year, we can enter her codes and premium contribution into the "All 12 months" column.
Mary's Part III is left blank because neither she nor her spouse and dependents enrolled in ABC Company's self-insured coverage for any day of any month of the calendar year.
As a side note, Mary's coverage, as well as her children's coverage, will be reported to the IRS through her husband's company. Because she declined coverage, ABC Company does not have any responsibility to report on Mary's actual coverage.
This blog is not intended to be legal advice nor should any discussion or opinion be construed as legal advice. Redears should contact legal counsel for legal advice.
Matt has taken his combined experience in the US Marine Corps and HR tech to bring practical insights on leadership, administration, and HR technology to the Benetech Advantage Blog. When he's not writing or teaching, he can be found paddling throughout the Adirondacks!