1095-C 1E vs 1H (2026): What Each Code Means + When

TL;DR

Code 1E on Form 1095-C Line 14 means you offered minimum value coverage to the employee and at least minimum essential coverage to their spouse and dependents. Code 1H means no offer of coverage was made for that month (or the person wasn’t your employee). The distinction between 1095-C 1E vs 1H drives everything downstream: whether you fill in Line 15, which Line 16 code applies, and whether your employee can claim Marketplace subsidies. Get it wrong and you risk AIR filing rejections or IRS penalty letters.

What Codes 1E and 1H Actually Mean

Every Applicable Large Employer (ALE) files Form 1095-C for each full-time employee. Line 14 captures the offer of coverage for each month, and codes 1E and 1H are two of the most commonly used entries. Here’s the IRS definition for each.

Code 1E means “Minimum essential coverage providing minimum value offered to employee and at least minimum essential coverage offered to dependent(s) and spouse.” In plain terms, you made a real health insurance offer to the employee that meets the minimum value threshold, and you also extended at least minimum essential coverage (MEC) to their spouse and dependent children. If the spousal offer was conditional (for example, only available if the spouse lacks access to other coverage), you’d use code 1K instead of 1E. source

Code 1H means “No offer of coverage.” The employee wasn’t offered any health coverage that qualifies as MEC for that month. This also covers months where the individual simply wasn’t your employee. source

The one-sentence difference: 1E says you made an offer that counts; 1H says you didn’t.

If you’re an ALE wondering whether your organization structure affects reporting obligations, understanding how controlled group rules affect ALE testing is a good starting point.

When to Use 1E vs 1H: Decision Rules

The choice between 1E and 1H on Form 1095-C comes down to a few concrete questions.

Did the offer cover every day of the month?

This is the rule most teams trip over. An offer only counts for Line 14 purposes if coverage would have been effective for all days of the calendar month. If an employee was terminated on June 10 and coverage ended that day, there was no valid offer for June, even if coverage was active for the first ten days. Use 1H for June. source

Was the employee in a waiting period?

During initial measurement or administrative periods before coverage kicks in, the employee has no offer. Code 1H applies. Pair it with 2D on Line 16 to indicate a Limited Non-Assessment Period (LNAP).

Is the employee on COBRA after termination?

COBRA continuation coverage after employment ends is not reported as an “offer” on Line 14. For post-employment COBRA months, use 1H on Line 14 and 2A on Line 16 (employee not employed). source

Is this a multiemployer (union) plan situation?

For 2025 reporting, the IRS interim relief instructs ALEs to use 1H on Line 14 with 2E on Line 16 for months covered by multiemployer interim relief. The IRS has flagged that this treatment could change for 2026 and beyond, so check the current instructions each year. source

Were spouse and dependents truly offered coverage?

If you offered minimum value coverage to the employee but did not extend any coverage to dependents or spouse, 1E is the wrong code. You’d need a different code like 1B (employee only) or 1C (employee and dependents, no spouse). 1E specifically requires all three tiers: employee, spouse, and dependents.

Quick Reference: 1E vs 1H at a Glance

What Changes on Lines 15 and 16

Understanding 1095-C 1E vs 1H is only half the job. Each code triggers specific requirements on the lines that follow.

Line 15: Employee Required Contribution

Line 15 must be completed whenever Line 14 shows code 1B, 1C, 1D, 1E, 1J, 1K, or any ICHRA offer code (1L through 1U). Enter the employee’s required monthly contribution for the lowest-cost self-only minimum value plan the employer offers. source

When Line 14 is 1H, leave Line 15 blank. There’s no offer, so there’s no contribution to report.

This matters because omitting Line 15 when it’s required is one of the most common triggers for AIR error codes like 1095C-070 and 1095C-020-05, which cause filing rejections. source

Line 16: Safe Harbor and Other Codes

Line 16 accepts one code per month that provides context about the employee’s status or the employer’s compliance position.

When Line 14 is 1E:

• 2C if the employee enrolled in your coverage for every day of the month. Code 2C generally supersedes other Line 16 codes. source
• 2F (W-2 safe harbor), 2G (federal poverty line safe harbor), or 2H (rate of pay safe harbor) if the employee waived coverage and you’re asserting an affordability safe harbor.
• You cannot use an affordability safe harbor code for any month where 1H appears. This is a strict rule.

When Line 14 is 1H:

• 2A for months the employee was not employed at all.
• 2B for a month where the employee was not full-time, or a month where coverage or the offer ended mid-month due to termination.
• 2D for months within a Limited Non-Assessment Period (initial measurement period, administrative period, or first months of employment).
• 2E for months covered by multiemployer interim relief.

For teams processing ICHRA eligibility verification, these Line 16 pairings become especially important when tracking who enrolled and who waived.

ICHRA Reporting: Do Not Use 1E

This is a critical distinction that most quick-reference guides miss entirely. If your organization offers an Individual Coverage HRA instead of (or alongside) a traditional group plan, you do not use code 1E for ICHRA months on Form 1095-C.

ICHRAs have their own set of Line 14 codes: 1L through 1U. Which code you pick depends on two factors:

1. Who is offered the ICHRA (employee only, employee plus dependents, employee plus spouse, or all three).
2. Whether you’re using the employee’s residence ZIP code or work-location ZIP code to determine affordability.

Line 15 for ICHRA months uses a specific formula: the lowest-cost silver plan self-only premium for the employee’s applicable age and location, minus the monthly ICHRA allowance. Line 17 must include the ZIP code used for the affordability determination. source

The affordability threshold for plan years beginning in 2025 is 9.02% of household income. source Employers with workers across multiple states should pay close attention to multi-location ICHRA compliance, since location-based affordability can vary significantly from one ZIP code to the next.

If you’re considering a move from group coverage to ICHRA, schedule a benefits consultation to make sure your 1095-C reporting setup reflects the right code series from day one.

Coding Examples You Can Mirror

These three scenarios cover the situations that generate the most confusion when choosing between 1E and 1H on Form 1095-C.

Example 1: New hire with a waiting period

An employee starts full-time on January 1. The employer has a 90-day waiting period. Coverage becomes available March 1. The employee declines coverage for the rest of the year.

Example 2: Mid-month termination

An employee was offered and enrolled in coverage January through May. They’re terminated June 10. COBRA is offered for July through December.

Notice that COBRA months are coded 1H, not 1E. Post-employment COBRA is not treated as an employer “offer” for Line 14 purposes.

Example 3: Multiemployer (union) plan, 2025

An employee is covered through a multiemployer arrangement for the full year under IRS interim relief rules.

This coding may change in future years. The IRS has explicitly noted the interim nature of this treatment. source

Mistakes That Trigger Notices or AIR Rejections

Missing Line 15 when Line 14 requires it

The most common filing error. Any month coded 1E (or 1B, 1C, 1D, 1J, 1K, or ICHRA codes 1L-1U) on Line 14 needs a dollar amount on Line 15. Omitting it triggers AIR error codes and your filing gets rejected. The fix is straightforward: ensure your payroll or benefits system populates the “lowest-cost self-only MV” premium for every month where an offer was made. source

Keeping payroll and benefit reimbursement data reconciled reduces the chance of gaps in Line 15 data.

1H during waiting periods without 2D

Using 1H is correct for waiting period months, but forgetting to pair it with 2D on Line 16 is a common oversight. Without the LNAP indicator, the IRS sees an unexplained gap in coverage offers, which can prompt follow-up letters.

Using affordability safe harbors with 1H

Affordability codes (2F, 2G, 2H) are only valid for months where MEC was offered. Pairing 2F with 1H is a logic error that the IRS’s systems can flag. If there’s no offer, there’s nothing to be “affordable.”

Overusing 1E when 1A or another code fits

Practitioners on Reddit’s Workday community report a recurring issue: payroll exports defaulting to code 1E for large employee populations where 1A (or other codes) should apply. One admin described finding “a large population” suddenly showing 1E in a year they hadn’t before, traced to a configuration change in eligibility rules. The fix involves running audit queries by coverage tier and spousal eligibility to catch these bulk miscodes before filing. source

Employees confusing “offer” with “enrollment”

This isn’t a filing mistake, but it creates downstream headaches. Employees who receive a 1095-C showing code 1E sometimes believe they were enrolled in coverage. Code 1E only indicates an offer was made. Code 2C on Line 16 indicates actual enrollment. HR teams should proactively explain this distinction when furnishing forms. Practitioners on tax forums regularly flag this confusion, especially during tax season when employees are trying to reconcile their returns.

Why 1E vs 1H Matters for Employee Subsidies

The difference between 1E and 1H on Form 1095-C directly affects whether employees (and their families) can claim the premium tax credit (PTC) on Marketplace coverage.

The general rule: an employee is ineligible for a PTC for any month they’re eligible for affordable, minimum-value employer coverage. Code 1E signals an offer was made, and when combined with a Line 15 amount below the affordability threshold, it can block PTC eligibility for that month. source

Code 1H, by contrast, indicates no offer, meaning the employee may be eligible for PTC during those months (assuming they meet other requirements).

Starting with 2023 tax years, the “family glitch” fix means affordability for spouses and dependents is based on the cost of family coverage, not just self-only coverage. This change made the Line 15 amount even more consequential for household-level PTC calculations.

For employers offering ICHRAs, the same principle applies with a twist: an individual is ineligible for PTC for any month they’re covered by an ICHRA or eligible for an affordable ICHRA. This makes the ICHRA affordability calculation on Line 15 (lowest-cost silver self-only premium minus monthly HRA allowance) critical to get right. You can find more details in the SimplyHRA FAQs section on employee questions about PTC and ICHRA interactions.

Quality Assurance Checklist for 1E and 1H Coding

Run through these five questions for every employee, every month, before you file:

1. Did the coverage offer extend through every day of the month? If no, use 1H (not 1E) for that month, even if coverage was active for part of it.

2. Were spouse and dependents genuinely offered coverage? If only the employee was offered, use 1B. If employee and dependents but not spouse, use 1C. Use 1E only when all three tiers were offered without conditions.

3. Is Line 15 filled in for every month that requires it? Any month with 1E (or 1B, 1C, 1D, 1J, 1K, or ICHRA codes) on Line 14 needs a dollar amount on Line 15. Any month with 1H should have Line 15 blank.

4. Is Line 16 showing the single correct code? Use 2C when enrolled. Use 2A, 2B, 2D, or 2E with 1H as appropriate. Never pair an affordability safe harbor with 1H.

5. If ICHRA: did you use the right code series, Line 15 formula, and Line 17 ZIP? ICHRA months use codes 1L through 1U on Line 14, not 1E. Line 15 follows the ICHRA-specific calculation, and Line 17 captures the ZIP code used for affordability.

Employers moving to an ICHRA and wanting to avoid these reporting pitfalls can schedule a demo to see how automated workflows handle Line 14 through Line 17 coding.

Frequently Asked Questions

Can I use 1E for a month where the employee was offered coverage but terminated mid-month?

No. For an offer to count on Line 14, coverage must have been available for every day of the calendar month. If the employee was terminated mid-month and coverage ended, use 1H for that month and pair it with 2B on Line 16. source

What’s the difference between 1E and 1A on Form 1095-C?

Code 1A means the employer offered a “qualifying offer,” which is a specific type of MV offer to the employee where the employee’s cost doesn’t exceed 9.02% (for 2025) of the mainland single federal poverty line, and MEC is offered to spouse and dependents. Code 1E is broader: it covers any MV offer to employee plus MEC to spouse and dependents, regardless of whether it meets the qualifying offer affordability threshold. If the offer qualifies for 1A, using 1A provides additional relief and simplifies Line 15 reporting.

Is COBRA reported as code 1E on Form 1095-C?

No. Post-employment COBRA continuation coverage is not reported as an offer on Line 14. Use code 1H for COBRA months after termination. Line 16 should show 2A (not employed) for months after the termination month, and 2B for the termination month itself if coverage ended before the last day. source

Do I use 1E if I offer an ICHRA?

No. ICHRAs use their own code series on Line 14: codes 1L through 1U. The specific code depends on who is offered the ICHRA and which ZIP code method you use for affordability. Line 15 must reflect the ICHRA-specific calculation (lowest-cost silver self-only premium minus the monthly HRA allowance), and Line 17 requires the ZIP code. source

What happens if I leave Line 15 blank when Line 14 shows 1E?

Your electronic filing will likely be rejected with an AIR error (such as 1095C-070 or 1095C-020-05). Line 15 is required whenever Line 14 contains a code that indicates an offer was made, including 1E. source

Can an employee claim the premium tax credit for months coded 1E?

Generally, no. If the employer’s offer was affordable and met minimum value, the employee (and potentially their household members) are ineligible for PTC for those months. The affordability determination relies on the Line 15 amount relative to the employee’s household income. Code 1H months, where no offer existed, do not block PTC eligibility. source

How do I code months for a union employee covered under multiemployer interim relief in 2025?

Use 1H on Line 14 and 2E on Line 16 for the months covered by the relief. Leave Line 15 blank. Monitor the IRS instructions annually, as the agency has indicated this interim treatment may change for future reporting years. source

What if my spousal coverage offer is conditional?

If the offer of coverage to the spouse depends on conditions (like the spouse not having access to other employer coverage), do not use 1E. Use code 1K instead, which indicates a conditional offer. 1E assumes an unconditional offer to employee, spouse, and dependents. source