Furloughs, layoffs and COBRA offers: Exploring the ACA reporting

If the COVID-19 pandemic forced your company to take the difficult actions of furloughs or layoffs in 2020, that was challenging enough. Now you have the obligation to provide Affordable Care Act (ACA) reporting forms on many of those employees, and the coding on those forms is a challenge all unto its own. While the IRS was kind enough to extend its “good faith effort” standard to 2020 ACA reporting (meaning if you make a mistake in good faith, the IRS will take your effort into consideration), it’s important you do your best to get the coding right on employees’ Forms 1095-C, particularly in Part II.

There are a number of factors involved in coding the forms correctly:

  • Was the employee furloughed (involuntary leave of absence) or laid off (employment terminated)?

  • Was the employee an Affordable Care Act (ACA) full-time employee (FTE) at the time of the furlough or layoff? Was the employee recalled to active service within a few weeks or months?

  • What was the employee offered, in the way of coverage (e.g., self-only, family) prior to the furlough or layoff, what coverage did the employee actually elect, and therefore, who received an offer of COBRA if medical plan eligibility was lost upon the furlough or layoff?

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