Reporting COBRA Coverage

As an employer or any filer of ACA returns, it’s important that everything is reported correctly on your 1094 and 1095 forms. This isn’t too hard with full-time employees who worked all year under the same coverage. But what about when it comes to reporting COBRA Coverage?

What is COBRA Coverage?
COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, which was passed in 1986. The act amended existing laws by giving certain former employees, retirees, spouses, and dependents the right to temporary continuation of health coverage at group rates. COBRA coverage is offered when the employee loses access to coverage under a group plan, due to voluntary or involuntary termination or a reduction in their hours of employment.

Reporting COBRA Coverage on Part II of Form 1095-C
If you’ve offered COBRA coverage to a terminated employee (generally anyone whose employment didn’t end because of gross misconduct), you won’t report it as an offer of coverage on line 14 of Form 1095-C. Instead, use code 1H, no offer of coverage, for any month the continued coverage applies.

If you need to report COBRA coverage for an active employee, say, someone whose hours were reduced and is, therefore, ineligible for plan coverage, you’ll report it in the same manner as an offer of that type of coverage to any other active employee.

Self-Insured Plans and COBRA Coverage
Under self-insured COBRA plans, spouses and dependents can elect to receive the continued coverage independently of the employee (i.e., if the employee declines coverage or is deceased). Employers who sponsor these plans will still need to report coverage offered to each non-employee spouse and dependent on a separate Form 1095-B or 1095-C from the employee. If a spouse and dependents elect to receive COBRA coverage along with the employee, you can report them on the same form.

Whatever you have to report on your ACA forms, ExpressIRSForms can help. Create an account or log in today to get started e-filing your ACA returns! If you have any questions, don’t hesitate to give us a call (704-684-4751) or send us a live chat Monday through Friday, 9:00 a.m. to 6:00 p.m. EDT. We also provide after hours assistance at support@ExpressIRSForms.com.

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How to Report COBRA on ACA Forms

When you’re working on your ACA Forms 1094 and 1095, you might run into a situation where you’ll need to report COBRA coverage information for your employee and/or their spouse and dependent(s). COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, the federal law that provides workers with the right to continued coverage in a group health plan.

How you report this COBRA coverage will depend on whether your employee enrolls in the coverage and whether the employee was offered coverage because of termination or a reduction in hours. If the employee doesn’t enroll in COBRA coverage, that’s easy enough: you’ll report no offer of coverage beginning with the month the employment was terminated throughout the remainder of the year on Form 1095-C, Part II. In order to avoid penalties for those months, you’ll code the former employee as not a full-time employee (Code 2B).

Now, if your former employee does enroll in COBRA coverage, you’re going to have to indicate that you made an offer of coverage for all the months the employee was covered, those under the original group plan and the ones the employee enrolled in COBRA. Use the same code indicator for all of these months. Your cost of coverage should change in this section from the lowest cost employee-only premium to the COBRA single premium.

If the individual is still employed and they’ve accepted your offer of COBRA coverage as a result of a reduction in hours, you’ll still report that an offer of coverage was made for all the months under the original group plan and COBRA. Even if the ongoing employee didn’t enroll in the COBRA coverage, you’ll need to report your offer. Your indicator codes - which will be different for the months the employee’s hours were reduced - will alert the IRS as to why the COBRA single premium is listed for the months COBRA was offered.

You can e-file your 1095-C Forms (COBRA offers and all!) with ExpressIRSForms. Just log into your account and select the ACA Forms option to get started. If you have any questions, you can give us a call Monday through Friday, 9:00 a.m. to 6:00 p.m. EDT, at (704) 684-4751; or send us an email anytime at support@ExpressIRSForms.com.



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