If you are using the look-back measurement period, one thing you may need to review before compiling the 1095-C information is the status assigned to your employees. When testing the logic used for look-back measurement periods for the Compile 1095-C option, we found that some customers may have not classified employees as full time that should have been, while others classified employees as full time that really should have been classified as variable hour or seasonal. The difference is important because full time employees are handled much differently from seasonal, variable hour, and part time employees.
One of the basic premises of the ACA is that offers of coverage are required for full time employees. Under the look-back measurement period method, you must classify employees when they are hired as either full time, part time, seasonal, or variable hour. If you hire a person for a non-part time, non-seasonal position, then that person is a full time employee and based on their hire date, is eligible for an offer of coverage. For the other categories, you check their hours after an initial measurement period to determine their status as either full or part time, and if the employee’s status is full time, an offer of coverage is owed to the employee.
For employees in an initial measurement period, a 2D code is reported on line 16. This lets the IRS know that the employee was in a measurement period, and thus you are not subject to a penalty for not offering coverage for that month. If an employee is improperly classified as a full time employee however, then the Compile 1095-C will not report the 2D code for the measurement period. In this case, you will need to change the employee’s ACA Type on the ACA tab page of the Employee Setup window in the HR program.
After compiling the 1095-C data, if you see a lot of employees with a lot of blank codes for line 16, the employee type is the first thing to check. After correcting the employee type, re-compile the 1095-C data and you should get correct results.
If the employee is a full time employee that is incorrectly set to seasonal, variable hour, or part time, then the 2D code could be reported incorrectly for a measurement period that the employee did not actually go through. Again, correct the ACA Type setting and recompile the 1095-C data.