Code 2F: W-2 Safe Harbor Definition

FOR each month
GIVEN codes codes 2E, 2C, 2A, 2D, and 2B don't apply
THEN fill Code 2F in each month
WHERE [MEC] / [(W-2 Box 1)/12] <= 9.5%

Source Text

(ii) Form W–2 safe harbor

(A) Full year offer of coverage. An employer will not be subject to an assessable payment under section 4980H(b) with respect to a full-time employee if that employee’s required contribution for the calendar year for the employer’s lowest cost selfonly coverage that provides minimum value during the entire calendar year (excluding COBRA or other continuation coverage except with respect to an active employee eligible for continuation coverage) does not exceed 9.5 percent of that employee’s Form W–2 wages from the employer (and any other member of the same applicable large employer that also pays wages to that employee) for the calendar year. Application of this safe harbor is determined after the end of the calendar year and on an employee-by-employee basis, taking into account the Form W–2 wages and the required employee contribution for that year. In addition, to qualify for this safe harbor, the employee’s required contribution must remain a consistent amount or percentage of all Form W–2 wages during the calendar year (or during the plan year for plans with non-calendar year plan years) so that an applicable large employer member is not permitted to make discretionary adjustments to the required employee contribution for a pay period. A periodic contribution that is based on a consistent percentage of all Form W–2 wages may be subject to a dollar limit specified by the employer.

(B) Adjustment for partial-year offer of coverage. For an employee not offered coverage for an entire calendar year, the Form W–2 safe harbor is applied by adjusting the Form W–2 wages to reflect the period for which coverage was offered, then determining whether the employee’s required contribution for the employer’s lowest cost self-only coverage that provides minimum value, totaled for the periods during which coverage was offered, does not exceed 9.5 percent of the adjusted amount of Form W–2 wages. To adjust Form W–2 wages for this purpose, the Form W–2 wages are multiplied by a fraction equal to the number of calendar months for which coverage was offered over the number of calendar months in the employee’s period of employment with the employer during the calendar year. For this purpose, if coverage is offered during at least one day during the calendar month, or the employee is employed for at least one day during the calendar month, the entire calendar month is counted in determining the applicable fraction.

back to IRS Form 1095-C

Code 2H: Rate of Pay Safe Harbor

FOR each month
GIVEN codes codes 2E, 2C, 2A, 2D, and 2B don't apply

For Hourly Employees:

IF Benefit MEC / (130 Hours * Pay Rate) <= 9.5%

WHERE Pay Rate = lowest hourly pay rate during the month

THEN use 2H

For non Hourly Employees:

IF Benefit (MEC / Monthly Pay) <= 9.5%

WHERE Monthly Pay is evaluated for the month that coverage starts (benefit start date)

THEN use 2H

Source Text

(iii) Rate of pay safe harbor.

An applicable large employer member satisfies the rate of pay safe harbor with respect to an hourly employee for a calendar month if the employee’s required contribution for the calendar month for the applicable large employer member’s lowest cost self-only coverage that provides minimum value does not exceed 9.5 percent of an amount equal to 130 hours multiplied by the lower of the employee’s hourly rate of pay as of the first day of the coverage period (generally the first day of the plan year) or the employee’s lowest hourly rate of pay during the calendar month. An applicable large employer member satisfies the rate of pay safe harbor with respect to a non-hourly employee for a calendar month if the employee’s required contribution for the calendar month for the applicable large employer member’s lowest cost self-only coverage that provides minimum value does not exceed 9.5 percent of the employee’s monthly salary, as of the first day of the coverage period (instead of 130 multiplied by the hourly rate of pay); provided that if the monthly salary is reduced, including due to a reduction in work hours, the safe harbor is not available, and, solely for purposes of this paragraph (e)(2)(iii), an applicable large employer member may use any reasonable method for converting payroll periods to monthly salary. For this purpose, if coverage is offered during at least one day during the calendar month, the entire calendar month is counted both for purposes of determining the assumed income for the calendar month and for determining the employee’s share of the premium for the calendar month.

back to IRS Form 1095-C

Code 2G: Federal Poverty Line Safe Harbor

FOR each month
GIVEN codes codes 2E, 2C, 2A, 2D, and 2B don't apply
IF MEC / [$11,770 / 12] <= 9.5%
THEN use code 2F

Source Text

(iv) Federal poverty line safe harbor.

An applicable large employer member satisfies the federal poverty line safe harbor with respect to an employee for a calendar month if the employee’s required contribution for the calendar month for the applicable large employer member’s lowest cost self-only coverage that provides minimum value does not exceed 9.5 percent of a monthly amount determined as the federal poverty line for a single individual for the applicable calendar year, divided by 12. For this purpose, if coverage is offered during at least one day during the calendar month, the entire calendar month is counted both for purposes of determining the monthly amount for the calendar month and for determining the employee’s share of the premium for the calendar month. For this purpose, the applicable federal poverty line is the federal poverty line for the State in which the employee is employed.

Federal Poverty Lines: https://www.federalregister.gov/articles/2015/01/22/2015-01120/annual-update-of-the-hhs-poverty-guidelines

Only Alaska and Hawaii have state specific lines - neither market is one which we plan on taking SmartFusion to.

back to IRS Form 1095-C