ACA Reporting Scenarios: Completing the 1095-C When Employees Elect a Rust Level Plan

Published by Matt Ingold on November 24, 2015

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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 an accepted offer of COBRA 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.

The following case is based on a scenario provided by a TN Healthcare Center. Thanks for the submission!

Grace is a full-time employee for Sunny Days Retirement Center, which has a January 1 plan-start date. Sunny Days offers both a fully-insured Minimum Essential Coverage (MEC) plan and a self-funded MEC plan that does not provide minimum value. Both plans are affordable, and are offered to both spouses and dependents. The self-coverage only employee monthly premium contribution for the fully-insured plan is $125, but only $55 for the self-insured plan.

In this case, Sunny Days offered the self-funded plan to employees so that they could have a less expensive option in fulfilling their individual mandate requirement to enroll in MEC. Grace is able to enroll in either plan, but elects to enroll herself and her spouse and dependents in the less expensive self-insured plan, and retains that coverage for the entire year. In so doing, she enrolled in a plan that did not provide minimum value, but was affordable and provided MEC.

How should the employer complete the 1095-C Parts II and III?

Why? For Part II, we use code 1E (Minimum essential coverage providing minimum value offered to employee and at least minimum essential coverage offered to dependent(s) and spouse) in the “All 12 Months” box because an offer of coverage was made to Grace, and it extended to spouse and dependents for all 12 months.

In line 15, we use $125, rather than $55, because the self-funded plan did not meet minimum value. Line 15 requres employers to fill in the employee premium share of the lowest cost self-coverage only minimum value plan. In this case, the fully insured option offered by Sunny Days Retirement Center is the cheapest minimum value plan offered, and therefore, the employer will use the corresponding $125 self-coverage only monthly premium contribution to complete line 15. It does not matter which plan Grace elects! The IRS is concerned with confirming that the employer made a qualifying MEC offer to Grace. The employer has done his or her duty, despite which plan Grace ultimately elects.

Line 16 will be 2C ( Employee enrolled in coverage offered) because Grace ultimately enrolled in MEC offered by the employer. The fact that the plan is a minimum value plan, in this case, does not matter. Grace has fulfilled her individual mandate requirement, and Sunny Days has fulfilled its employer mandate responsibilities.

Because Grace enrolled in the employer’s self-insured coverage, the employer is responsible for completing Part III of the 1095-C. In this case, Grace and her dependents are listed with their social security numbers, and each has the “Covered all 12 months” box checked off.

Thank you for the continued submissions. Again, the more you submit, the more we will write!

This blog is not intended to be legal advice nor should any discussion or opinion be construed as legal advice. Readers should contact legal counsel for legal advice.