IRS Releases 2020 Drafts of
ACA Form 1094-C and 1095-C

This article further explores the following points:

  • What is an HRA?
  • What Codes Should Be Used on Line 17?
  • Why Choose ACAwise for ACA Reporting?

2020 ACA Form Draft - An Overview

- Updated september 14, 2020 - 8.00 AM - Admin, ACAwise

On July 13, 2020, the IRS released drafts of Form 1094-C and 1095-C. These Forms which are integral to the ACA reporting process have undergone changes and updates, primarily the Form 1095-C.

It is important to note that these are drafts, not final revisions of Form 1094-C and 1095-C. They are still subject to change until the new versions are finalized by the IRS. However, these drafts are a helpful tool for mandatory reporters and service providers who will need to update their reporting methods to accommodate these changes.

Line 17

A new line has been added to the Form 1095-C. This line also comes with a complete set of codes that filers must learn and report for tax year 2020. Line 17 was created to accommodate the Executive Order 13813 by President Trump earlier this year.

This Executive Order issues a rule that allows employers to reimburse their employees who purchase their health coverage plan on the Healthcare Marketplace using an HRA.

What is an HRA?

A Health Reimbursement Arrangement or HRA, is defined by the IRS as an employer-funded plan that reimburses employees for medical expenses and/or health insurance premiums. Because employers can claim a tax deduction for this type of plan, employees usually get their reimbursement free of taxes.

For additional information on HRAs, you can check out https://www.irs.gov/newsroom/health-reimbursement-arrangements-hras

What Codes Should Be Used on
Line 17?

The IRS determines the affordability of health insurance coverage based on geographical information. The cost of living in the area where you live helps them understand if the coverage is affordable relative to the salary you receive. This is why employers who offer HRAs must provide the zip codes of their employees in their
ACA reporting for 2020.

This is a list of codes that are related to HRAs and should be used on line 14 to indicate the nature of your employees health insurance coverage.

  • 1L - Individual coverage health reimbursement arrangement (HRA) offered to you only with affordability determined by using the employee's primary residence location
    ZIP Code.
  • 1M - Individual coverage HRA offered to you and dependent(s) (not spouse) with affordability determined by using the employee's primary residence location ZIP Code.
  • 1N - Individual coverage HRA offered to you, spouse and dependent(s) with affordability determined by using the employee's primary residence location
    ZIP Code.
  • 1O - Individual coverage HRA offered to you only using the employee’s primary employment site ZIP Code affordability safe harbor.
  • 1P - Individual coverage HRA offered to you and dependent(s) (not spouse) using the employee’s primary employment site ZIP Code affordability
    safe harbor.
  • 1Q - Individual coverage HRA offered to you, spouse and dependent(s) using the employee’s primary employment site ZIP Code affordability safe harbor.
  • 1R - Individual coverage HRA that is NOT affordable offered to you; employee and spouse or dependent(s); or employee, spouse, and dependents.
  • 1S - Individual coverage HRA offered to an individual who was not a full-time employee.

For more information on the changes to Form 1095-C, please refer to the IRS draft at https://www.irs.gov/pub/irs-dft/f1095c--dft.pdf

The team at ACAwise will keep you updated on any additional changes to the ACA reporting requirements for tax year 2020. Be sure to check back periodically, as we will provide information on the finalized Form 1095-C as soon as
it is available.

Choose ACAwise for your
ACA Reporting

ACAwise has experience in generating 2020 ACA Form 1095-C codes with 100% accuracy. Our comprehensive ACA reporting solution is designed to handle your ACA reporting requirements, producing the best results.

This is a list of codes that are related to HRAs and should be used on line 14 to indicate the nature of your employees health insurance coverage.

All our clients are happy with our process and often refer our services to other employers for their
ACA Reporting.

Let us take care of your ACA Reporting!

We file your 1094/1095 Forms with the IRS and postal mail the copies to employees before the deadline.

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