What Does Code 1E Mean on Form 1095-C?

Form 1095-C is a document related to the Affordable Care Act (ACA) that provides details about employer-provided health coverage. Employers send this annual statement to their employees to report on health insurance offers. The form helps verify compliance with ACA regulations.

Understanding the 1095-C Form

The 1095-C form is issued by Applicable Large Employers (ALEs) to their full-time employees. An ALE is generally defined as an employer with at least 50 full-time employees, including full-time equivalent employees.

This form reports health coverage information required under the ACA’s employer shared responsibility provisions. It demonstrates whether an employer offered health coverage that meets ACA standards. It contains information about offers made to employees and months coverage was available. This reporting helps the Internal Revenue Service (IRS) determine if employers are meeting their obligations.

Decoding Line 14 and Code 1E

Line 14 of Form 1095-C reports the type of health coverage an employer offered to an employee each month. Code 1E on Line 14 indicates that Minimum Essential Coverage (MEC) was offered, and the coverage provided Minimum Value (MV) and was affordable.

Minimum Essential Coverage (MEC)

Minimum Essential Coverage (MEC) refers to a basic level of health coverage that satisfies the ACA’s requirement for having health insurance. Examples include employer-sponsored plans, Medicare, and most Medicaid plans. MEC plans typically cover preventive and wellness services.

Minimum Value (MV)

Minimum Value (MV) indicates that the health plan offered by the employer pays for a substantial portion of covered benefits. A plan provides minimum value if it covers at least 60% of the total allowed costs, including physician services and inpatient hospital services.

Affordability

For a plan to be “affordable,” the employee’s share of the premium for the lowest-cost self-only coverage that provides minimum value must not exceed a certain percentage of their household income. For 2025, this affordability percentage is 8.39%. Employers can use various safe harbors to determine if the coverage meets the affordability standard.

Impact of Code 1E for Individuals

The presence of Code 1E on your Form 1095-C generally means your employer offered you qualifying health coverage. This information is relevant if you obtained health coverage through a Health Insurance Marketplace. If your employer offered MEC that met minimum value and was affordable, you are typically not eligible for the Premium Tax Credit (PTC) if you purchased Marketplace coverage instead.

The ACA’s intent is that individuals use affordable, employer-sponsored coverage when available. Form 1095-C helps the IRS determine your eligibility for tax credits. The code also indicates your employer likely met their responsibilities under the ACA’s employer mandate. Understanding this code is crucial for accurately preparing tax returns, especially concerning any health insurance subsidies received from the Marketplace.

What to Do with Your 1095-C

Keep your Form 1095-C with your other tax records. This document provides official information about your health coverage offer from your employer. You do not need to attach Form 1095-C to your federal income tax return. It is primarily an informational document for your records and for the IRS. The information on the form can be used to help determine eligibility for tax credits or to verify your coverage status.