Decoding “98 Percent Offer Method” from Line 22 (on Form 1094-C)

Form 1094-C is the transmittal form that is sent to the IRS along with a firm’s Form 1095-Cs. As noted in an earlier blog, this form is far more complicated and confusing than a mere “transmittal form” would suggest.

As a reminder, the option on line 22 are:

  1. Qualifying Offer Method
  2. Qualifying Offer Method Transition Relief
  3. Section 4980H Transition Relief
  4. 98% Offer Method.

You can’t complete line 22 of Form 1094-C unless you decode the options listed as “certifications of eligibility.” We have previously decoded what a “qualifying offer method” entails. Here’s the scoop on Option D, the 98% Offer Method.

Option D, the 98% Offer Method, is also hard to qualify for. It requires that:

  • Employer that is an ALE (applicable large employer) offered for all months of the calendar year, affordable coverage that provided minimum value to at least 98% of employees receiving Form 1095-C
  • MEC to dependents.

What’s the payoff for offering this generous coverage? An employer that meets these requirements doesn’t have to complete Part III, column (b) of Form 1094-C (the full-time employee count).

What’s the catch? Perhaps the better question is “that’s a payoff”? This may be a consideration if an employer has difficulty determining which employees are full-time.

Here’s what the IRS offers in an FAQ on employer reporting:

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