Form 1095-C Coding Problems for COBRA Coverage – Confusion & Contradictions

From Health Care Attorneys, P.C.:

By now all applicable large employers should have begun, if not finished, the process of completing the Form 1095-C. As discussed in previous articles the most challenging parts of the Form 1095-C to complete are lines 14, 15, and 16. This statement is most evident when handling COBRA rights. This article will discuss some of the more confusing COBRA scenarios. However, many more COBRA scenarios are possible that raise similar coding issues and confusion. 

One common COBRA scenario occurs when an employee gains COBRA rights in the middle of the year. The final regulations for section 6056 upon which the Form 1095-C is based do not mention COBRA coverage. Similarly, the final regulations for section 6055 upon which the Form 1095-B is based or the instructions to the Form 1095-B which could both be relevant for interpreting the rules for self-insured plans do not mention COBRA coverage. Therefore, one is left to interpret the instructions to the Form 1095-C for coding COBRA coverage on line 14, 15, and 16. 

The Form 1095-C instructions are clear that an individual who receives his/her COBRA rights because of a termination in service is treated differently than an individual who receives his/her COBRA rights and is still an active employee such as an employee who is no longer eligible for coverage because of a reduction in hours. First, a former employee who receives his/her COBRA rights upon a termination of employment should not be reported as having been offered coverage on line 14. Instead, an employee who receives COBRA rights upon a termination of employment in the middle of the year should be coded using code 1H for line 14, leaving line 15 blank, and inserting code 2A for line 16 for any month for which the offer of COBRA coverage applies. This is also how a terminated employee would be coded if he/she had no COBRA rights. ...