Preparing Form 1095-C for Distribution: A Focus on Line 14

As the deadline for furnishing Form 1095-C approaches, HR professionals are once again preparing for one of the most detail-oriented aspects of Affordable Care Act (ACA) reporting. Before forms are distributed to employees, a careful review of each Form 1095-C is an important step to help ensure accuracy and avoid unnecessary follow-up or penalties.

Start with a thorough review of Form 1095-C

Form 1095-C serves as the primary record of an employer’s health coverage offers to full-time employees. The IRS uses this form to assess employer compliance with the ACA’s employer shared responsibility provisions.

Before furnishing forms, HR teams should review each Form 1095-C for:

• Correct employee demographic information
• Accurate months of employment and full-time status
• Consistency between Line 14 (offer of coverage), Line 15 (employee cost), and Line 16 (safe harbor or other relief codes)

Catching errors at this stage can prevent corrected forms later and reduce employee confusion during tax season.

Why accuracy matters more than ever

Accuracy in ACA reporting is especially important this year because the IRS no longer accepts a general good-faith compliance argument to relieve penalties. In prior years, employers that made reasonable efforts to comply could sometimes avoid penalties even if minor errors were present. That relief is no longer available.

Incorrect or inconsistent reporting can lead to:

• IRS penalty notices
• Time-consuming response and appeal processes
• Increased scrutiny in future reporting years

For HR professionals, this means that careful attention to detail is no longer just a best practice. It is a necessity.

Understanding Line 14 and its role in ACA reporting

Line 14 is where employers report the type of health coverage, if any, that was offered to each employee for each month of the year. This line tells the IRS whether an offer of minimum essential coverage was made and to whom the coverage was offered.

To identify the correct Line 14 code, employers must understand:

• Which employees were offered coverage
• Who the coverage extended to, such as employee, spouse, and dependents
• Whether the coverage provided minimum value
• Whether any offers to spouses were conditional

Because Line 14 drives how the IRS evaluates compliance, accurate coding is especially important in the absence of good-faith compliance relief.

Deciphering common Line 14 codes

Below is a summary of commonly used Line 14 codes and what they represent:

• 1A: Qualifying Offer. Minimum essential coverage offered to the employee with a required contribution equal to or less than the adjusted federal poverty line amount, and at least minimum essential coverage offered to spouse and dependents.
• 1B: Minimum essential coverage offered to the employee only.
• 1C: Minimum essential coverage offered to the employee and dependents, but not the spouse.
• 1D: Minimum essential coverage offered to the employee and spouse, but not dependents. Do not use if the spouse offer was conditional. In that case, use code 1J.
• 1E: Minimum essential coverage offered to the employee, spouse, and dependents. Do not use if the spouse offer was conditional. Use code 1K instead.
• 1F: Minimum essential coverage offered that does not provide minimum value.
• 1G: Offer of coverage for at least one month to an individual who was not a full-time employee for any month of the year, or to a non-employee enrolled in self-insured coverage.
• 1H: No offer of coverage.
• 1I: Reserved for future use.
• 1J: Minimum essential coverage offered to the employee and conditionally offered to the spouse.
• 1K: Minimum essential coverage offered to the employee and dependents, with a conditional offer to the spouse.
• 1L through 1V: Codes related to Individual Coverage Health Reimbursement Arrangements (ICHRAs), reflecting different affordability and coverage scenarios.

Understanding these distinctions is key to selecting the correct code for each employee and each month.

Key tips for ensuring Line 14 accuracy

When reviewing Line 14, HR professionals should:

• Conduct a month-by-month review for each employee
• Confirm that coding aligns with plan eligibility rules and offer dates
• Ensure consistency across similarly situated employees
• Pay close attention to conditional spouse coverage rules
• Verify that Line 14 codes align logically with Line 16 codes

Even small inconsistencies can raise questions during an IRS review.

How BAS supports ACA reporting

Employers that use BAS for ACA Data Collection and Reporting can take comfort in knowing that Line 14 is coded automatically based on the data collected. This reduces the risk of manual coding errors and helps ensure consistent application of ACA rules.

For more information about BAS’s ACA Data Collection and Reporting Service, contact your account manager or email solutions@basusa.com.

Benefit Allocation Systems (BAS) provides best-in-class, online solutions for: Employee Benefits Enrollment; COBRA; Flexible Spending Accounts (FSAs); Health Reimbursement Accounts (HRAs); Leave of Absence Premium Billing (LOA); Affordable Care Act Record Keeping, Compliance & IRS Reporting (ACA); Group Insurance Premium Billing; Property & Casualty Premium Billing; and Payroll Integration.

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This article is for informational purposes only and is not intended as legal, tax, or benefits advice. Readers should not rely on this information for taking (or not taking) any action relating to employment, compliance, or benefits. Always consult with a qualified professional before making decisions based on this content.