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COBRA FAQ's For Employer Reporting

Q.  Does an employer need to complete Form 1095-C for an employee who terminates employment mid-year causing a COBRA qualifying event?

 A.  Yes, Form 1095-C is required to be completed in the year that an employee terminates. When employment termination is the COBRA-qualifying event, COBRA is never reported as an offer of coverage – even if the former employee actually enrolls in COBRA coverage. Per the IRS’ final instructions, report as follows for the months that COBRA was offered:

  • Line 14 – Always use Code 1H (no offer of coverage).
  • Line 15 – Leave Line 15 blank. You do not report cost information.
  • Line 16 – Always use Code 2A (employee not employed during the month).
  • Part III – Employers with self-insured plans will complete this section for former employees and dependents that enroll in COBRA and will continue to report for as long as COBRA coverage is in force.

Q.  How does an employer report a loss of health coverage due to reduction in hours?

A.  If an employee’s hours are reduced causing a COBRA qualifying event, COBRA is always reported as an offer of coverage. (This is the opposite of the rule for terminated employees.) In a reduction of hours situation, Lines 14 and 16 are coded the same as any other active employee.

  • Line 14 - Enter the same code that is entered for active employees. Never use Code 1H (no offer of coverage).
  • Line 15 – Enter the COBRA premium for the lowest cost self-only coverage that meets the minimum essential coverage requirements.
  • Line 16 – If COBRA is elected, enter Code 2C (employee enrolled). If COBRA is not elected, enter the same code that would be used for an active employee who declines coverage.
  • Part III –Self-insured plans should complete this section for each enrollee.

 Q.   How does an employer report a family member who independently elects COBRA?

 A.  Every individual who loses coverage due to a qualifying event has an independent right to elect COBRA. For example, in a divorce, the former spouse has a right to elect COBRA. In a termination of employment, the former employee can decline COBRA, but the spouse or dependent can separately elect COBRA. When the employee does not elect COBRA, but someone else does, employers should report as follows:

  • Line 14 – Enter Code 1G (offer to non-employee).
  • Line 15 – Leave Line 15 blank. You do not have to report cost information.
  • Line 16 – Enter Code 2C (enrolled in coverage).
  • Part III – Self-insured plans will complete Part III for each enrollee.

Q.  How does an employer report COBRA coverage for a “non-employee?” – For example, a person receiving COBRA coverage who terminated employment in a prior year, or a non-employee COBRA beneficiary (such as a spouse or child who independently elected COBRA).

A.  Fully-insured employers. The COBRA continuant will not receive Form 1095-C since he or she was not your ACA-FT employee at any time during the calendar year. 

Self-funded employers. You must continue to report for all non-employees that remainenrolled in your plan. The non-employee COBRA continuant must receive Form 1095-C because he or she was enrolled in your self-funded health plan for at least one month during the year.

  • Line 14 – Enter Code 1G in “ALL 12 Months” (offer to non-employee). (Code 1G signals to the IRS that the individual was not an ACA-Full Time employee for any month in the calendar year and Form 1095-C is being filed solely to comply with Section 6055 - the Individual Mandate.)
  • Line 15 – Leave Line 15 blank. You do not have to report cost information.
  • Line 16 – Leave Line 16 blank.
  • Part III –Self-insured plans must complete Part III for each enrollee.

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