Ask ISM's Health Care Reform Specialist
Vol. 14 No. 6
Q: As we finish up Form 1095-C and turn to the transmittal of 1094-C, I keep receiving questions on Line 22: Certifications of Eligibility. What are these, and do we need to complete them?
A: This line provides you a chance to input certain codes/certifications as a way to “simplify” the filing requirements. You can use as many as you want, or none at all.
The certifications are:
- Qualifying Offer Method
- Qualifying Offer Method Transition Relief
- Section 4980H Transition Relief
- 98% Offer Method
The Qualifying Offer Method
You can use this certification if your school offered qualifying health insurance to your Full-Time Equivalent employees (FTE), the employees' spouses, and any dependent children. The offered insurance would have been affordable, as based on the federal poverty line safe harbor (i.e., 9.5% of mainland federal poverty line, adjusted for inflation). The insurance must be offered for the entire calendar year, or for the entire time the employee was employed.
The advantages of this method is that you do not have to record the cost of health insurance on line 15 of Form 1095-C. You also do not have to give the employees the 1095-C, instead giving them a statement that you offered health insurance that was deemed affordable.
This said, the school still must provide the 1095-C Form to the IRS. This option requires the creation of yet another document: the "offered affordable insurance" statement to employees.
Qualifying Offer Method Transition Relief
This certification is similar to the Qualifying Offer Method, but your school's offer of health insurance was not for the entire calendar year. Again, you do not have to report the cost of health insurance on Form 1095-C if you use this certification.
Note that this option will only be seen on the 2015 form.
Section 4980H Transition Relief
This certification would be used if you did not offer health insurance to your employees, or it was deemed unaffordable for all or part of 2015.
This certification could be considered your "get out of jail free" card under certain conditions. If your school employed 100 or more FTEs, but did not:
- offer insurance to all FTEs; OR
- offer insurance to employees' eligible dependent children; OR
- offer the insurance deemed affordable (as based on the three federal safe harbors: W-2, rate of pay, and the federal poverty line)
... then you had until the start of the new plan year to correct the coverage.
If you're using this certification, make sure you check this box and fill in the transition relief code on Form 1095-C and in part 3. If your school employed between 50 and 100 people and did not offer health insurance, this certification is your "bye" for 2015, since you had until 2016 to offer insurance.
98% Offer Method
This certification says that your school offered health insurance to 98% of your employees for whom you are filing. With this code, you do not have to identify the FTEs or your FTE count by month. You will have to report on employees who are not full-time because you offered them insurance.
Again, it's not required to use any of these methods if you don't want or need to.