Employer Reporting Quick Hit - Reporting Offers of Coverage - 1A versus 1E

Applicable large employers (50 or more FTEs) and employers offering self-funded group medical plans are in the midst of finalizing reporting via Forms 1094 and 1095 for the 2022 calendar year. The reporting is due to the IRS in late February or March depending on whether the employer is submitting by mail or electronically, and Form 1095 copies must be provided to individuals by March 2nd. There are no significant changes to the reporting requirements this year, but the IRS has confirmed that there is no longer reporting penalty relief for good faith efforts. In other words, employers need to take more responsibility for ensuring reporting is as complete and accurate as possible, and they may need your help to do so. We plan to release a series of FAQs over the next several weeks that you can use to refresh your employer reporting understanding, and of course pass along to your clients when appropriate.

Reporting Offers of Coverage – 1A versus 1E

When reporting offers of coverage in Part II, Line 14 of the Form 1095-C, both codes 1A and 1E indicate an offer of minimum value coverage that is made available to the employee, spouse, and children. The difference is tied to whether the employee contribution meets the FPL safe harbor.

• 1E = a minimum value offer of coverage to employee, spouse and children
• 1A = 1E + the offer meets the FPL safe harbor (also referred to as a “qualifying offer”)

If the employer offers minimum value coverage to employees, spouses and children that meets the FPL safe harbor, it is considered a "qualifying offer.” When that is the case, the employer has two options for coding offers of coverage on Line 14 the Form 1095-C:

1. Mark the "Qualifying Offer Method" on Line 22 of the Form 1094-C, and then use Code 1A on Form 1095-C (Line 14) and leave Lines 15 and 16 blank; or
2. Use Code 1E on Form 1095-C (Line 14), enter the contribution amount on Line 15, and enter Code 2G on Line 16.

Either way is correct. Using 1A just simplifies the reporting a bit in that Lines 15 and 16 can then be left blank.

NOTE: 1E could be paired with any of the affordability safe harbor codes (i.e., 2F, 2G, or 2H).

While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it. This publication is distributed on the understanding that the publisher is not engaged in rendering legal, accounting or other professional advice or services. Readers should always seek professional advice before entering into any commitments.