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Employers must report the type of health coverage offered to each full-time employee on Form 1095-C to comply with the Affordable Care Act (ACA) requirements. Two common codes used on Line 14 of the form are Code 1A and Code 1E, which refer to different types of offers and reporting requirements.
Code 1A: Qualifying Offer
Code 1A indicates that the employer made a qualifying offer of minimum essential coverage (MEC) that is affordable under the Federal Poverty Line (FPL) safe harbor and provides minimum value. Specifically, Code 1A means that the coverage was offered to the employee, their spouse, and dependent(s), and the employee’s contribution did not exceed 9.5% (adjusted annually) of the FPL for a single individual. When using Code 1A, employers do not need to complete Lines 15 or 16 on Form 1095-C, as this code confirms that coverage is affordable under the FPL standard.
Code 1E: Minimum Value Offer
Code 1E is used when the employer offers MEC that provides minimum value to the employee, their spouse, and dependents, but does not meet the FPL affordability criteria. Instead, the employer may determine affordability using alternative safe harbors, such as the Rate of Pay or W-2 safe harbor. With Code 1E, employers must also complete Line 15, indicating the lowest monthly premium the employee would have paid for self-only coverage. This additional detail is necessary as Code 1E doesn’t guarantee affordability under FPL, so more information is required.
Choosing the correct code is essential for ACA compliance, as each code reflects different affordability criteria and affects how the IRS assesses coverage offerings. Employers should carefully review their coverage offerings and safe harbor selections to ensure accurate coding on Form 1095-C.
If you use BAS for your ACA data collection and reporting, BAS will automatically review your plan account and populate 1095-C forms with the appropriate Code for your plan configuration. For information about BAS’ ACA services, contact your account manager or email solutions@basusa.com.
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