What do ACA codes on Form 1095-C mean?
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Last modified 11/3/2023 2:28:20 AM EST |
Added by ACAwise Team
The IRS has created two sets of ACA codes to give employers a way to describe their healthcare coverage offerings and IRS Safe Harbors they may use.
Each code indicates a different scenario regarding an offer of healthcare coverage or explains why an employer should not be subject to a penalty for a particular employee for any given month of the calendar year.
Let's take an example, an employee, John, 30 years old, working for ABC Consulting for an annual salary of $28,000 from April 1, 2020. Let’s assume there is a waiting period of 2 months, and John was offered ICHRA from June 1, 2020. The Safe Harbor used to determine affordability is the W-2 Wages.
Here's how the ACA codes generated for the above example
Line 14- (Jan - May), No Offer of Coverage - Code 1H.
(Jun-Dec), ICHRA offered - Code 1O.
Line 15- $201.58/month
Line 16- (Jan - Mar), Employee not employed - Code 2A.
(Apr-May), Waiting period - Code 2D.
(Jun-Dec), Employee enrolled in ICHRA - Code 2C.
Line 17- Affordability based on work location safe harbor - 29730
The Code Series 1 in Line 14 and addresses
o Whether or not the individual was offered coverage.
o What type of healthcare coverage was offered.
o The months that coverage was offered.
The Code Series 2 in Line 16 and addresses
o Whether or not an individual was employed and, if so, if he or she was a full-time or part-time employee.
o Whether or not the employee was enrolled in the offered health insurance coverage.
o Whether or not the coverage offered was affordable.
If you are unsure how to generate ACA codes, no worries. Contact us to share your employee’s raw data, including your employee census, enrollment, payroll data, along with the employee coverage details. From then, you stay relaxed; we will take care of processing your data, generate the 1094 and 1095 forms with the required ACA codes, and e-file 1095-C with the IRS and postal mail copies to your employees.