Common Information Reporting Questions – Part 1 | January 7, 2015

Dan Kuperstein


In this series on Information Reporting, ERISA attorney Dan Kuperstein answers some common questions about qualifying offers, and how to report them to the IRS.


Hi, I’m Dan Kuperstein and welcome to this episode of ComplianceMINUTE. One common question is, “What is a qualifying offer
and how do I report this?” This is confusing because the explanation in the instructions doesn’t explain this very well and employers often think that by making an offer of coverage that meets the ACA minimum standards, for example, like essential coverage and minimum value, that the offer constitutes a qualifying offer. But that’s not the case.

The question comes up when completing the Form 1094-C on line 22 where it asks the employer to certify if a qualifying offer was made or whether qualifying offer transition relief is available in order for an employer to certify on line 22 that a qualifying offer was made.

The employers’ employee-only coverage must provide minimum value and must be offered to the employee at no more than 9.5% of the federal mainland poverty level, which is $92.39 cents per month for 2015. The offer must include the opportunity to enroll the spouse and children of the employee through the month of the child attains age 26 in at least minimum essential coverage.

That’s certainly more favorable coverage than what many employers out there are providing and making such a qualifying offer is not what is required to avoid penalties. Under the ACA’s mandates, assuming that the qualifying offer has been has been made to a full-time employee for some or all months in 2015 for which the employer had an employer mandate obligation regarding the employee, the employer may choose to report that fact, although it’s not required to, by using code 1A on line 14 of the employees’ Form 1095-C.

If the employer chooses to use code 1A for one or more months, it is then allowed to skip line 15 of the 1095-C, which is the line that requires the employer to insert the employees’ premium costs for the least expensive minimum value option offered.

A second benefit of making a qualifying offer is allowed if:

  1. The employer made such an offer for all months and;
  2. For which the employer had an employer mandate obligation regarding the employee and to the employee was not enrolled in the employers’ self-insured coverage for even a single day.

Ff those two conditions are met then, the employer is allowed to provide the employee with an abbreviated alternative statement in lieu of providing him or her with the form 1095-C. However, the employer must still file the actual 1095-C with the IRS, so the employer still has to create this form and therefore the value of the second benefit does not seem so extraordinary.

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