What do the line 16 ACA codes on Form 1095-C mean?
2.4k views |
Last modified 11/3/2023 3:13:12 AM EST
According to the ACA employer mandate, ALE must offer Minimum Essential Coverage that is affordable and provides minimum value to full-time employees to avoid the Employer’s Shared Responsibility Provision Penalty from the IRS.
To report the offered health coverage information to the IRS and comply with the ACA employer mandate, the IRS has created two sets of ACA codes in Line 14 and 16 for the ALE member in ACA Form 1095-C.
Line 16 ACA codes on Form 1095C
The line 16 ACA Codes on Form 1095-C gives employers an opportunity to indicate whether they have met the employer’s shared responsibility "Safe Harbor" provisions of Section 4980H.
Basically, the line 16 ACA codes on Form 1095-C is used by the Applicable Large Employers to indicate an exception to a penalty from the IRS.
| Line 16 ACA Codes | Description |
|---|---|
| 2A | You can use this code to communicate with the IRS that you did not employ this person during the month. |
| 2B |
Use this code to indicate that the employee was not full time (FT) for the month. |
| 2C | This indicates that the employee was enrolled in the coverage you offered. |
| 2D | This represents the employee was in a Limited Non-assessment Period (LNAP) or waiting period for the month. |
| 2E | You can use this code to indicate that you are eligible for the multiemployer interim relief rule. |
| 2F | Use this code to represent that the offered coverage is affordable based on the Form W-2 safe harbor to avoid penalty from the IRS. |
| 2G | Use this code to represent that the offered coverage is affordable based on the Federal Poverty Line safe harbor to avoid penalty from the IRS. |
| 2H | Use this code to represent that the offered coverage is affordable based on the Rate of Pay safe harbor to avoid penalty from the IRS. |
| 2I | Reserved |
Take this scenario, for example, a full-time employee hired in May and he is in a waiting period for a month and eligible for coverage from June 1st. The employee chose to enroll himself & his dependents in the fully-insured plan.
The Code 2A will be used by the employer in line 16 to indicate that the employee was not employed. Then, Code 2D is used for the month the employee is in the waiting period. Code 2C is used for the months that the employee was enrolled in coverage.
If you are not confident with generating Line 16 ACA codes on Form 1095-C, feel free to reach out to the ACAwise support team with your requirements directly at (704)-954-8420 or send us an email at [email protected]. Our ACAwise experts will contact you to discuss your ACA reporting requirements.
From there, we take care of generating your 1094 and 1095 forms with the required line 16 ACA codes, e-file 1095-C with the IRS, and postal mail copies to respective employees within the IRS specified time limit.