Feb 21, 2025
Compliance News Week Ending February 21, 2025
In this Article
- ACA Employer Reporting Tip - What are the most common employer reporting errors?
- ACA Employer Reporting Tip - How should employers complete Line 22 of the Form 1094-C (Certification of Eligibility)?
Two ACA Employer Reporting Tips
Q. What are the most common employer reporting errors?
A: A few of the most common errors:
- One common error is the failure to mark “Yes” for the minimum essential coverage offer indicator in Part III, column (a) of the Form 1094-C to let the IRS know that coverage was offered to at least 95% (or all but 5, if greater) of full-time employees each month as required under §4980H(a).
- Another common error is the failure to use a safe harbor code (a “2” code) on Line 16 of Form 1095-Cs, especially the affordability safe harbor codes, which then suggests to the IRS that a penalty may be owed under §4980H(b).
Q. How should employers complete Line 22 of the Form 1094-C (Certifications of Eligibility)?
A: If an employer meets the requirements for the qualifying offer method or the 98% offer method, the employer indicates this on Line 22 of the Form 1094-C and then is able to skip some of the reporting steps. Employers who do not qualify for either of these options may still be in compliance but wouldn't qualify for the reporting simplification and should leave Line 22 blank. It is an option to check both Boxes A and D, only Box A or Box D, or neither.
- Qualifying Offer Method - Box A indicates the employer made a "qualifying offer" of coverage to at least one full-time employee for all months the employee was eligible. A "qualifying offer" requires the offer to:
- be available to employee, spouse and children;
- provide minimum value; and
- meet the federal poverty level (FPL) safe harbor.
Use of the qualifying offer method is really helpful in that Code 1A can be used for an offer of coverage on Line 14 of Form 1095-C and nothing is required for Lines 15 and 16 (no employee contribution information or safe harbor codes required).
- 98% Offer Method - Box D indicates the employer made an offer of coverage to 98% or more of employees receiving a Form 1095-C (generally only full-time employee require a Form 1095-C). The offer of coverage must:
- be available to employee, spouse and children;
- provide minimum value; and
- meet one of the three affordability safe harbors.
The 98% offer method is not overly advantageous...it simply allows the employer to skip providing a full-time employee count in Part III, column (b) of Form 1094-C. It is more advantageous for an employer who offers coverage to both full-time and part-time employees and doesn't want to worry about differentiating between who is actually full-time and who is part-time when reporting.
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