1095-C Reporting Case Scenario: How to Report on COBRA Enrollees that Carryover Coverage to a New Calendar Year

Published by Matt Ingold on December 10, 2015

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Post Updated on December 10, 2015.

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 NJ manufacturing company. Thanks for the submission!

Joseph was working at North Eastern Cocoa, Inc. and terminated employment in the late fourth quarter. He elected COBRA coverage for him and his spouse, and carried that coverage through the new year. In the new year, from January to March, Joseph’s COBRA coverage was for he and his spouse. In April and May, his spouse dropped off from the coverage, and in June his coverage was temed due to failed payment. Joseph was not covered for a single day during the month of June.

If North Eastern Cocoa is a fully insured employer, then they do not have any 1095-C reporting requirements for the period of January-June that Joseph was enrolled in COBRA as a non-employee. COBRA enrollees for fully-insured companies will be covered by the insurance carriers for IRS Code 6055 reporting requirements.

If North Eastern Cocoa was a self-insured employer, this is how Joseph’s 1095-C would look for the calendar year following his termination:

COBRA Continuation 1095-C

The line 14 code will be 1G (offer of coverage to employee who was not a full-time employee for any month of the calendar year (which may include one or more months in which the individual was not an employee) and who enrolled in self-insured coverage for one or more months of the calendar year) for those months that an offer of COBRA coverage has been extended for an entire calendar month, (January-May). In this case, 1H (No offer of coverage (employee not offered any health coverage or employee offered coverage that is not minimum essential coverage, which may include one or more months in which the individual was not an employee)) is used for June-December. There cannot be months left blank.

In a self-insured case, the employer is acting in the place of the insurance carrier, and is therefore responsible for IRS Code Section 6055 reporting. They must report for what month’s Joseph and his spouse were enrolled in coverage in the employer-sponsored plan on Part III of the 1095-C.

In this case, because Joseph was never a full time employee during this particular reporting year, North Eastern Cocoa, Inc has no IRS Code section 6056 reporting requirements. In other words, the employer has no obligation to offer Joseph coverage or to ensure that coverage is affordable and provides minimum value.

The IRS updated guidance on COBRA reporting in September of 2015. For more specifics on this update, please visit our blog: How to Report an Accepted Offer of Coverage on the 1095-C.

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.