HR Tasks and Form 1095-C: Demystifying Line 16

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As the deadline for furnishing Form 1095-C approaches, HR professionals are gearing up for the meticulous task of completing Lines 14 and 16—a critical aspect of Affordable Care Act (ACA) reporting. This year holds particular importance, because the IRS no longer will accept an argument of good-faith compliance to relieve penalties. This article delves into the intricacies of Line 16 which is the place on the form where employers identify an offer of health coverage.

Understanding Line 16

Line 16 of the Form 1095-C is where the employer identifies that one of the following situations applied to the employee.

• The employee was not employed or was not a full-time employee,
• The employee enrolled in the minimum essential coverage offered,
• The employee was in a Limited Non-Assessment Period
• The ALE Member met one of the affordability safe harbors with respect to this employee, or
• The ALE Member was eligible for multiemployer interim rule relief.

While the Form instructions say to leave Line 16 blank if no indicator code applies, the IRS clearly does not like to see a blank space and often imposes penalties without a code in Line 16.

The available codes are as follows:

• Employee not employed during the month.
• Employee not a full-time employee.
• Employee enrolled in health coverage offered.
• Employee in a section 4980H(b) Limited Non-Assessment Period.
• Multiemployer interim rule relief.
• Section 4980H affordability Form W-2 safe harbor.
• Section 4980H affordability federal poverty line safe harbor.
• Section 4980H affordability rate of pay safe harbor.
• Reserved for future use

Tips for Accuracy

Conduct a thorough review of Line 16 codes for each employee before distributing forms. While reviewing, ensure consistency in coding among employees and adherence to conditional offer nuances.

By properly coding Line 16, HR professionals contribute to ACA reporting, ensuring compliance and accurate insights into the health coverage landscape of their organization.

Employers that use BAS for ACA Data Collection and Reporting can rest easy because BAS codes Line 16 automatically. For information about BAS’ ACA Data Collection and Reporting Service, contact your account manager or solutions@basusa.com.