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IRS Releases Draft Form 1095-C for 2021 with Minimal Changes

July 13, 2021

In late May the IRS released its 2021 draft Form 1095-C. The 2021 reporting season will be the seventh time applicable large employers (ALEs) have been required to furnish the IRS the Forms 1094-C and 1095-C. While many employers are settling into the annual reporting requirement, there are still many employers who are falling short of the required guidelines and are being penalized. In this article we discuss the changes made to the 2021 Form 1095-C.

New Codes

The 2021 Form 1095-C includes two new codes for line 14. Both codes are related to individual coverage HRAs which are an option for an employer to satisfy the employer shared responsibility (ESR) requirement. The two new codes are:

1T - Individual coverage HRA offered to employee and spouse (no dependents) with affordability determined using employee’s primary residence ZIP code.

1U - Individual coverage HRA offered to employee and spouse (no dependents) using employee’s primary employment ZIP code affordability safe harbor.

An employer utilizing either new code will have to complete line 15 of the Form 1095-C. The 2020 Form 1095-C did not account for an employer offering an individual coverage HRA to the employee and the spouse, but not the dependents. It is important to point out an employer needs to offer coverage to an employee’s dependents to avoid a potential section 4980H penalty with respect to that particular employee. Aside from individual coverage HRAs being a strategy pursued by few employers, neither new code offers coverage to dependents so we do not anticipate these codes being used frequently by employers.

Clarification when there are More Than 13 Covered Individuals on a Single Form 1095-C

The 2021 instructions clarify that additional copies of page three of the Form 1095-C can be used by employers who need to complete part III of the Form 1095-C and have more than 13 covered individuals on a single Form 1095-C. Remember, only employers who sponsor a self-insured health plan need to complete part III of the Form 1095-C. Furthermore, the chances of a single Form 1095-C having more than 13 covered individuals is remote. Regardless, the draft Form 1095-C has now clarified how to handle the situation by using additional copies of page three.


With the exception of two new codes that should never be used by employers implementing a compliant strategy and some clarifying language regarding a rare situation in part III, nothing has changed with respect to the Form 1095-C. The IRS continues to issue noncompliant employers penalty notices which makes compliance imperative. Accord Systems has an impeccable record as not a single one of our clients has received an IRS penalty related to ACA compliance. If you have any questions or think Accord Systems may be able to assist with your ACA compliance needs, please contact us.

About the author – Ryan Moulder serves as General Counsel at Accord Systems, LLC and is a Partner at Health Care Attorneys P.C. Ryan received his LL.M. from Georgetown University Law Center and his J.D. from Saint Louis University School of Law. He has distinguished himself as a leader in the Affordable Care Act arena and has written and spoken on a variety of ACA topics as it relates to compliance for companies.

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