The Affordable Care Act (ACA) added two employer reporting requirements to the Internal Revenue Code (Code), which will take effect for 2015 reporting:
- Code § 6056 requires applicable large employers (ALEs) to provide an annual statement to each full-time employee detailing the employer’s health coverage offer (or lack of offer).
- Code § 6055 requires employers (any size) that provide minimum essential coverage (MEC) under a self-funded (self-insured) plan to provide an annual statement to covered employees and former employees (including information about covered dependents).
The IRS has issued Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, for ALEs to satisfy the reporting requirement under Code § 6056. If the employer self-funds its plan(s), the employer also will use Form 1095-C to satisfy the additional requirement under Code § 6055.
The IRS has created two sets of codes in order to provide employers with a consistent way to describe their offers of health coverage. Each code indicates a different scenario regarding an offer of coverage, or explains why an employer should not be subject to a penalty for a particular employee, for a given month.
- Code Series 1 is used for Line 14 of Form 1095-C and addresses:
- Whether an individual was offered coverage.
- What type of coverage was offered.
- Which months that coverage was offered.
- Code Series 2 is used for Line 16 of Form 1095-C and addresses:
- Whether the individual was employed and, if so, whether he or she was full time or part time.
- Whether the employee was enrolled in coverage.
- Whether the employer is eligible for transition relief as an employer with a non-calendar year plan or as a contributor to a union health plan.
- Whether coverage was affordable and, if so, based on which IRS safe harbor.
The list that follows provides an overview of the codes, with descriptions, a brief explanation of when the code should be used, and a clarification of what the effect of choosing a particular code may be.
You can also access the full list of codes, along with descriptions, in the instructions for Form 1095-C.