Complete Guide to Filing Form 1095-C for Terminated Employees

Introduction: Why Reporting Terminated Employees on Form 1095-C Requires Special Attention

Filling out Form 1095-C for terminated employees presents unique challenges that many employers find confusing. When an employee leaves your organization—whether through voluntary resignation, layoff, retirement, or involuntary termination—you must accurately report their coverage status for every month of the calendar year. This includes months before their termination, the termination month itself, and all months after employment ended. Getting these details wrong can result in IRS penalty assessments reaching $330 per form or trigger the employer shared responsibility penalty of up to $4,350 per affected employee. Understanding how to properly complete 1095-C for terminated employees is essential for every Applicable Large Employer (ALE).

The complexity of reporting 1095-C terminated employees stems from several factors. First, employers must determine whether the terminated employee was full-time for at least one month during the year—only full-time employees require a Form 1095-C. Second, the termination month requires careful consideration of coverage dates and the proper Line 16 code. Third, employers must track whether the employee elected COBRA continuation coverage and how to report those months. Finally, employers need to ensure they can deliver the Form 1095-C to a former employee who may have moved since their departure. Many employers make costly mistakes by using incorrect codes for post-termination months or failing to issue forms to short-term employees who terminated mid-year.

This comprehensive guide walks you through every aspect of completing Form 1095-C for terminated employees. We will explain which terminated employees need a 1095-C, what codes to use for months before and after termination, how to handle COBRA continuation coverage, and how to ensure former employees receive their forms on time. Whether you are an HR professional, benefits administrator, or business owner managing ACA compliance, this article provides the detailed guidance you need to report terminated employees correctly.

Topics covered in this guide:

  • Determining 1095-C requirements: Which terminated employees must receive forms
  • Line 14 codes for terminated employees: Reporting coverage offers before and after termination
  • Line 16 codes for terminated employees: Using code 2A correctly for post-termination months
  • Termination month reporting: How to handle partial months of employment
  • COBRA continuation coverage: Reporting requirements when former employees elect COBRA
  • Delivering forms to former employees: Address requirements and electronic delivery options
  • Common mistakes: How to avoid errors that trigger penalties
  • Step-by-step examples: Real-world terminated employee reporting scenarios

Which Terminated Employees Need Form 1095-C?

The Full-Time Threshold Rule

Not every employee who left your organization during the year requires a Form 1095-C. The IRS requires employers to furnish Form 1095-C only to employees who were full-time for at least one calendar month during the tax year. This rule applies equally to current employees and terminated employees. Understanding this threshold is the first step in correctly reporting 1095-C terminated employees.

Under the ACA, a full-time employee is one who averages 30 or more hours of service per week (or 130 hours per month). For employees who worked the entire month, full-time status is straightforward. For employees hired or terminated mid-month, you must determine whether they would have averaged 30 hours per week had they worked the entire month, or use one of the IRS-approved measurement methods.

Key questions to determine if a terminated employee needs Form 1095-C:

  • Did the employee work full-time hours (30+ per week average) for any complete calendar month during the year?
  • For employees using the look-back measurement method, was the employee determined to be full-time during a stability period?
  • Was the employee offered coverage because they met the full-time definition, even if they later terminated?

If the answer to any of these questions is yes, the terminated employee must receive a Form 1095-C.

Examples of Terminated Employees Who Do and Do Not Need 1095-C

Scenario Full-Time for Any Month? 1095-C Required?
Employee worked January-August as full-time, terminated August 31 Yes (January-August) Yes
Employee worked January-March as full-time, terminated March 15 Yes (January-February, possibly March) Yes
Part-time employee (20 hrs/week) worked January-December, terminated December 31 No No
Employee worked February 1-15 full-time, terminated after 2 weeks No (not a complete month) No
Variable-hour employee determined full-time through measurement period, terminated June 30 Yes (stability period months) Yes
Seasonal employee worked May-August full-time, terminated August 31 Yes (May-August) Yes

Important note: The determination is based on full calendar months. An employee hired on March 15 and terminated on March 25 did not work a full calendar month and would not require a 1095-C based solely on that period. However, if they were employed for other full months during the year when they worked full-time, they would still need the form.

Special Consideration: Rehired Employees

When a terminated employee is rehired during the same calendar year, a single Form 1095-C covers all periods of employment. The form reports all 12 months, using the appropriate codes to indicate employment status each month. For months between termination and rehire, use code 2A on Line 16. The break-in-service rules determine whether the employee is treated as a new hire or continuing employee for measurement and stability period purposes, but the reporting is still on one form per employee per year.

Completing Part II of Form 1095-C for Terminated Employees

Line 14: Offer of Coverage Codes for Terminated Employees

Line 14 of Form 1095-C reports what coverage was offered to the employee each month. For 1095-C terminated employees, the correct Line 14 code depends on what coverage was offered during employment and what applies after termination. The Line 14 codes commonly used for terminated employees include:

Code Description Terminated Employee Scenario
1A Qualifying Offer Months when full-time and coverage met qualifying offer standards
1E Minimum value coverage to employee, spouse, and dependents Months when full-time and MV coverage offered to family
1B Minimum value coverage to employee only Months when coverage was offered only to the employee
1C Minimum value coverage to employee and dependents Coverage offered to employee and children but not spouse
1H No offer of coverage Months after termination when no COBRA was offered or available
1I Reserved (do not use) N/A

Critical point for terminated employees: For months after termination when the employee is no longer employed and no COBRA coverage is offered, use code 1H on Line 14. This indicates no offer of coverage was made. However, if COBRA continuation coverage is offered after termination, the appropriate offer code (typically 1E or 1B depending on the COBRA coverage level) should be used instead.

Line 15: Employee Share of Premium for Terminated Employees

Line 15 reports the employee's monthly share of the lowest-cost self-only minimum value coverage. For 1095-C terminated employees, this line is completed only for months when coverage was offered. During months after termination with code 1H on Line 14 (no offer), Line 15 is left blank.

Line 15 guidance for terminated employees:

  • Months of active employment with coverage offered: Enter the monthly premium amount
  • Termination month (if coverage continued through month-end): Enter the monthly premium amount
  • Months after termination (no COBRA): Leave Line 15 blank
  • Months with COBRA offered: Enter the COBRA premium amount (employee share)
  • Code 1A months: Leave blank (affordability is built into the code definition)

For the termination month, report the full monthly premium if coverage was offered for any part of that month. The IRS does not require proration of Line 15 amounts.

Line 16: Safe Harbor and Employment Status Codes for Terminated Employees

Line 16 is critical for 1095-C terminated employees reporting. This line reports applicable safe harbors, employment status, and enrollment information. The Line 16 codes most relevant for terminated employees are:

Code Description When to Use for Terminated Employees
2A Employee not employed during the month All months after termination when employee not employed
2B Employee not full-time during the month Months when employee worked part-time before termination
2C Employee enrolled in coverage Months when terminated employee was enrolled in coverage (including COBRA)
2D Employee in limited non-assessment period (waiting period) Rarely applicable for terminations; used during initial employment waiting periods
2F W-2 safe harbor Months when coverage was affordable based on W-2 wages
2G Federal poverty line safe harbor Months when coverage was affordable based on FPL calculation
2H Rate of pay safe harbor Months when coverage was affordable based on rate of pay

Understanding Code 2A for Post-Termination Months

The most important code for 1095-C terminated employees is code 2A. This code specifically means "Employee not employed during the month" and is used for every month after the employee's termination when they are not employed by your organization. Code 2A provides relief from the employer shared responsibility penalty because you cannot be penalized for not offering coverage to someone who does not work for you.

Key points about code 2A:

  • Use code 2A on Line 16 for every month after the termination date when the employee was not employed
  • Code 2A is typically paired with code 1H on Line 14 (no offer) for post-termination months
  • The termination month itself may or may not use code 2A—see the termination month guidance below
  • If a terminated employee elects COBRA coverage, you may use code 2C instead of 2A for months with COBRA enrollment
  • Code 2A is required even if the employee receives COBRA—the choice depends on whether they actually enrolled

Reporting the Termination Month on Form 1095-C

How to Handle Partial Months of Employment

The termination month presents a unique reporting challenge for 1095-C terminated employees. When an employee terminates mid-month, you must determine the appropriate codes for that month. The IRS provides guidance that for ACA reporting purposes, an employee is treated as employed for a month if they were employed on any day of that month.

General rules for the termination month:

  • If coverage continued through month-end: Report the offer code on Line 14 and enrollment code (2C) or safe harbor code on Line 16
  • If coverage terminated with employment: Report the offer code on Line 14 through the coverage end date; Line 16 may show 2C if enrolled that month
  • If employee was full-time through termination: Report the appropriate offer and safe harbor codes for that month

The critical factor is whether the employee was considered full-time for that month. If an employee terminates early in a month (for example, on the 5th), they may not have enough hours to be considered full-time for that month. In such cases, code 2B (not full-time) might be appropriate for Line 16.

Termination Month Code Selection Examples

Termination Scenario Line 14 Code Line 16 Code Explanation
Employee terminates June 30, enrolled in coverage through June 30 1E 2C Full month of employment and coverage
Employee terminates June 15, coverage through June 30, enrolled 1E 2C Coverage extended through month-end
Employee terminates June 15, coverage ends June 15, was enrolled 1E 2C Was enrolled for part of the month
Employee terminates June 5, worked less than 130 hours in June 1H or 1E 2B or 2A May not be full-time for June; depends on hours
Employee terminates June 20, coverage offered, employee declined 1E 2F/2G/2H Safe harbor code for affordability

COBRA Continuation Coverage and Form 1095-C Reporting

How COBRA Affects 1095-C for Terminated Employees

When a terminated employee elects COBRA continuation coverage, the reporting on Form 1095-C changes significantly. COBRA coverage is still coverage offered by the employer (through the employer's group health plan), so it affects both Line 14 and Line 16 reporting. Understanding how to report COBRA for 1095-C terminated employees is essential for accurate compliance.

Key COBRA reporting principles:

  • COBRA offer: If COBRA is offered to a terminated employee, Line 14 should reflect the type of coverage offered (typically the same code used during active employment)
  • COBRA enrollment: If the employee enrolls in COBRA, use code 2C on Line 16 for months with COBRA coverage
  • COBRA premium: Line 15 should reflect the COBRA premium amount (which may be up to 102% of the full premium cost)
  • COBRA declined: If COBRA is offered but declined, use code 2A on Line 16 (not employed) for months after termination

Important distinction: Even though code 2A means "not employed," it is the correct code when COBRA is offered but declined. The offer is reflected on Line 14, and the non-employment status is reflected on Line 16. The employee is protected from penalty because they are no longer employed, and the employer is protected because they offered coverage.

COBRA Reporting Scenarios

Scenario 1: Employee elects COBRA

An employee terminates on March 31 and elects COBRA continuation coverage. The COBRA coverage runs from April through September when the employee gains other coverage.

Month Line 14 Line 15 Line 16 Explanation
January-March 1E $200.00 2C Active employment with coverage
April-September 1E $612.00 2C COBRA coverage (102% of premium)
October-December 1H (blank) 2A COBRA ended, not employed

Scenario 2: Employee declines COBRA

An employee terminates on June 30 and is offered COBRA but declines it.

Month Line 14 Line 15 Line 16 Explanation
January-June 1E $175.00 2C Active employment with coverage
July-December 1H (blank) 2A COBRA offered but declined; not employed

Note: Some employers report the COBRA offer on Line 14 even when the employee declines. The IRS has not provided definitive guidance on whether to use 1H (no offer) or the offer code when COBRA is offered but declined. The safer approach is to use 1H with code 2A, which clearly indicates the employee is not employed and was not enrolled in coverage. This approach is consistent with IRS guidance that employers are not penalized for employees who are no longer employed.

COBRA and Employer Shared Responsibility Penalty

A key benefit of understanding COBRA reporting for 1095-C terminated employees is avoiding unnecessary employer shared responsibility penalties. When a terminated employee enrolls in Marketplace coverage and receives premium tax credits, the IRS may send a Letter 226-J proposing penalties.

Proper use of code 2A on Line 16 demonstrates that the employee was not employed during the months in question. This code provides complete relief from the employer shared responsibility penalty—you cannot be penalized for not offering coverage to someone who does not work for you. Even if a former employee receives subsidized Marketplace coverage after termination, your correct 1095-C reporting protects you from penalties.

Step-by-Step Examples: Filling Out 1095-C for Common Termination Scenarios

Example 1: Full-Year Employee Who Terminates in August

An employee worked full-time from January through August, with coverage throughout their employment. They terminated on August 31 and did not elect COBRA.

1095-C reporting:

Month Line 14 Line 15 Line 16 Explanation
January-August 1E $150.00 2C Full-time employment with coverage
September-December 1H (blank) 2A Not employed after termination

Example 2: Employee Who Terminates Mid-Month

An employee worked full-time and terminated on July 15. Coverage continued through July 31 (employer policy to continue coverage through month-end). No COBRA was elected.

1095-C reporting:

Month Line 14 Line 15 Line 16 Explanation
January-July 1E $180.00 2C Full-time; coverage through July 31
August-December 1H (blank) 2A Not employed after termination

Example 3: Short-Term Employee Who Worked Full-Time

An employee was hired on February 1 and terminated on April 30 after completing their 90-day probationary period. They worked full-time and were enrolled in coverage during March and April.

1095-C reporting:

Month Line 14 Line 15 Line 16 Explanation
January 1H (blank) 2A Not employed
February 1H (blank) 2D Waiting period
March-April 1E $160.00 2C Coverage offered and enrolled
May-December 1H (blank) 2A Not employed after termination

Example 4: Employee Terminated Early in the Month

An employee worked full-time and terminated on October 3 due to a layoff. They worked fewer than 30 hours in October (only 24 hours before termination). Coverage ended October 3.

1095-C reporting:

Month Line 14 Line 15 Line 16 Explanation
January-September 1E $175.00 2C Full-time employment with coverage
October 1H (blank) 2A Partial month; not full-time for October
November-December 1H (blank) 2A Not employed after termination

In this example, the employee was not full-time for October because they did not work 130 hours (or average 30 hours per week) that month. Code 2A is appropriate because the employee was effectively not employed for ACA purposes during October.

Example 5: Rehired Employee

An employee worked full-time from January through April, terminated April 30, was rehired September 1, and worked full-time through December.

1095-C reporting:

Month Line 14 Line 15 Line 16 Explanation
January-April 1E $165.00 2C First period of employment
May-August 1H (blank) 2A Not employed during break
September-December 1E $165.00 2C Second period of employment

Delivering Form 1095-C to Terminated Employees

Address Requirements for Former Employees

One of the challenges with 1095-C terminated employees is ensuring forms reach former employees who may have moved since their departure. The IRS requires employers to furnish Form 1095-C to all employees who were full-time for any month during the year, including those who have terminated. The furnishing deadline for tax year 2025 forms is March 3, 2026.

Best practices for delivering 1095-C to former employees:

  • Use the last known address: Mail forms to the most recent address in your records
  • Request forwarding: Use first-class mail to enable postal forwarding
  • Document delivery attempts: Keep records of when and where forms were mailed
  • Contact former employees: If possible, verify addresses before mailing
  • Address update process: Include information in termination paperwork about providing updated addresses for tax forms

Electronic Delivery Options

Employers may deliver Form 1095-C electronically to terminated employees, but only if the employee has affirmatively consented to electronic delivery. This consent must meet specific IRS requirements:

  • Consent must be affirmative: The employee must actively agree to electronic delivery (not just fail to object)
  • Consent must be informed: The employee must understand they are giving up the right to a paper copy
  • Consent can be withdrawn: The employee must be able to request paper copies at any time
  • Consent remains valid: Prior consent from active employment generally remains valid after termination

If a terminated employee previously consented to electronic delivery during their employment, you may continue to deliver their Form 1095-C electronically after termination. However, you must ensure the delivery method still works (for example, if you used a company email address that has been deactivated, you must mail a paper copy).

Returned or Undeliverable Forms

If a Form 1095-C mailed to a terminated employee is returned as undeliverable, you should:

  • Document the attempt: Keep records of the mailing date and returned envelope
  • Make reasonable efforts: Try to obtain a current address (contact references, review personnel files, etc.)
  • Retain the form: Keep the Form 1095-C in your records even if it cannot be delivered
  • File with IRS anyway: The obligation to file Form 1095-C with the IRS is separate from the furnishing requirement

The IRS has indicated that employers who make good-faith efforts to deliver forms to employees will not be penalized if the forms cannot be delivered due to incorrect addresses, as long as the employer exercised reasonable care.

Common Mistakes When Reporting 1095-C for Terminated Employees

Mistake 1: Using Wrong Line 16 Code After Termination

The most common error with 1095-C terminated employees is using the wrong code on Line 16 for months after termination. Many employers mistakenly continue using safe harbor codes (2F, 2G, 2H) or leave Line 16 blank for post-termination months. The correct code is 2A (not employed) for every month after the employee's termination when they are no longer on your payroll.

Incorrect: Line 16 showing 2F or blank for November-December after September termination

Correct: Line 16 showing 2A for all months after termination

Mistake 2: Failing to Issue Forms to Short-Term Employees

Employers sometimes fail to issue Form 1095-C to employees who worked only briefly before terminating. Under ACA rules, any employee who was full-time for at least one month must receive a 1095-C, regardless of how briefly they were employed. An employee who worked full-time for January and February before terminating on February 28 must receive a Form 1095-C. Failing to issue forms to short-term employees can result in penalties for failure to furnish.

Mistake 3: Incorrect Termination Month Reporting

Employers sometimes report the termination month incorrectly, especially for mid-month terminations. Common errors include:

  • Using code 2A for the termination month when the employee was actually employed for part of the month
  • Failing to report coverage that extended past the termination date
  • Using the wrong offer code when coverage terms changed at termination
  • Not accounting for COBRA offers that begin in the termination month

Mistake 4: COBRA Reporting Errors

COBRA reporting is a frequent source of errors for 1095-C terminated employees. Common mistakes include:

  • Failing to report COBRA coverage when the employee actually enrolled
  • Using the wrong premium amount on Line 15 (should be COBRA premium, not active employee premium)
  • Not updating Line 14 to reflect COBRA coverage offer
  • Reporting COBRA coverage on Form 1095-B instead of Form 1095-C (for ALEs, the 1095-C is the correct form)

Mistake 5: Not Updating Address Records

Many employers fail to maintain current addresses for former employees, leading to undeliverable Form 1095-C mailings. Best practice is to request a forwarding address at the time of termination and to periodically update records when forms are returned as undeliverable.

Penalties for Incorrect Terminated Employee Reporting

Information Return Penalties

Errors on 1095-C terminated employees forms can trigger IRS information return penalties. These penalties are assessed per form based on how quickly errors are corrected:

Correction Timing Penalty Per Form (2025) Maximum Annual Penalty
Within 30 days of deadline $60 $630,500
By August 1 $130 $1,891,500
After August 1 $330 $3,783,000
Intentional disregard $660+ No cap

Employer Shared Responsibility Penalty

Beyond information return penalties, incorrect reporting of 1095-C terminated employees can expose employers to the employer shared responsibility penalty (ESRP). However, proper use of code 2A for post-termination months provides complete protection because the penalty does not apply to months when an individual is not an employee.

The risk arises when employers fail to use code 2A, potentially making it appear that the employee was employed but not offered coverage. This can trigger IRS inquiries and Letter 226-J penalty assessments that must then be disputed.

Deadlines for Terminated Employee Forms

Employee Furnishing Deadline

All employees who were full-time for any month during the year must receive their Form 1095-C by the furnishing deadline. For tax year 2025 forms, the deadline to furnish to employees is March 3, 2026. This includes 1095-C terminated employees who left the company at any point during the year.

IRS Filing Deadline

Forms 1095-C must be filed with the IRS by March 31, 2026 (electronic) for tax year 2025. The forms are filed with Form 1094-C as the transmittal. Employers can request a 30-day automatic extension using Form 8809.

Frequently Asked Questions About 1095-C for Terminated Employees

What Line 16 code do I use for months after an employee terminates?

Use code 2A (employee not employed during the month) on Line 16 for all months after the employee's termination date. This code provides relief from the employer shared responsibility penalty because you cannot be penalized for not offering coverage to someone who is not your employee.

Do I need to issue 1095-C to an employee who only worked for two months?

Yes, if the employee was full-time for at least one complete calendar month. Even employees who worked briefly must receive Form 1095-C if they met the full-time threshold (averaging 30+ hours per week) for any month during the year. Use code 2A for all months before hire and after termination.

How do I report COBRA coverage on Form 1095-C for a terminated employee?

If the terminated employee enrolls in COBRA, use the appropriate offer code on Line 14 (typically 1E or 1B), enter the COBRA premium amount on Line 15, and use code 2C on Line 16 for months with COBRA coverage. Once COBRA ends, switch to code 1H on Line 14 and code 2A on Line 16.

What if a terminated employee moved and I can't deliver the form?

Make reasonable efforts to obtain a current address, mail the form to the last known address using first-class mail, and document your delivery attempts. If the form is returned undeliverable, retain it in your records. You must still file the form with the IRS regardless of whether you can furnish it to the employee.

Can I deliver Form 1095-C electronically to a former employee?

Yes, but only if the employee previously provided affirmative consent to electronic delivery. Prior consent from active employment generally remains valid after termination, but you must ensure the delivery method still works. If the employee used a company email that has been deactivated, you must mail a paper copy.

What code do I use for the termination month itself?

The termination month reporting depends on the specific circumstances. If the employee was enrolled in coverage for any part of the month, use code 2C on Line 16. If coverage continued through month-end, report the full offer on Line 14. If the employee worked very few hours in the termination month (less than full-time equivalent), code 2A or 2B may be appropriate.

Do I report an employee who was terminated for cause differently?

No. The reason for termination does not affect Form 1095-C reporting. Whether an employee resigned voluntarily, was laid off, retired, or was terminated for cause, the reporting follows the same rules. Use code 2A on Line 16 for all months after termination regardless of the termination reason.

What happens if I don't send 1095-C to a terminated employee?

Failure to furnish Form 1095-C to a terminated employee who was full-time for any month can result in penalties of up to $330 per form. Additionally, the terminated employee may contact the IRS if they do not receive their form, which could trigger an inquiry into your ACA compliance.

How do I handle a terminated employee who was rehired?

Issue a single Form 1095-C covering all periods of employment during the year. Use code 2A on Line 16 for the months between termination and rehire when the employee was not working. The months of active employment are reported with the appropriate offer and enrollment codes.

Should I use code 2B or 2A for an employee who terminates early in the month?

If the employee did not work enough hours to be considered full-time for that month (less than 130 hours or not averaging 30 hours per week), code 2A is typically appropriate because they are not considered employed for ACA purposes for that month. Code 2B is used when an employee is employed but not full-time. For very early terminations, 2A is usually the correct choice.

How BoomTax Simplifies 1095-C Reporting for Terminated Employees

Correctly completing Form 1095-C for terminated employees requires tracking termination dates, determining proper codes, and ensuring forms reach former employees. BoomTax streamlines this process with specialized features designed for ACA compliance:

  • Automated Code Selection: BoomTax's intelligent system identifies terminated employees and automatically applies code 2A for post-termination months. Eliminate manual code selection errors that can lead to IRS inquiries.
  • Termination Date Tracking: Import employee data including termination dates, and BoomTax automatically calculates which months require which reporting treatment. No more manual month-by-month code entry.
  • COBRA Integration: Easily track COBRA elections and automatically adjust Line 14, 15, and 16 codes for employees who continue coverage after termination.
  • Bulk Data Validation: Before filing, BoomTax validates your data against 500+ IRS business rules. Catch errors in terminated employee reporting before they result in rejections or penalties.
  • Multi-EIN Support: Manage 1095-C filings for terminated employees across multiple employer entities from a single account. Essential for controlled groups with employees transferring between entities.
  • IRS E-Filing: File directly with the IRS through the AIR system. BoomTax is an authorized transmitter—no need to navigate complex IRS systems.
  • State Filing Support: Automatically file with California, New Jersey, Rhode Island, and D.C. from the same platform.
  • Print and Mail Services: BoomTax handles printing and mailing employee copies, including to former employees at their last known address. Track delivery status and handle returned mail.
  • Unlimited Corrections: If you discover errors in terminated employee reporting after filing, correct and refile at no additional cost.

Ready to simplify your 1095-C reporting for terminated employees? Get started with BoomTax today and ensure accurate, compliant ACA reporting for all your employees—current and former.

Conclusion: Mastering 1095-C Reporting for Terminated Employees

Accurately completing Form 1095-C for terminated employees is essential for ACA compliance and avoiding costly penalties. The key to success is understanding which terminated employees need forms, using code 2A correctly for post-termination months, handling COBRA coverage appropriately, and ensuring forms reach former employees at their current addresses.

Key takeaways for 1095-C terminated employees:

  • Full-time threshold: Only employees who were full-time for at least one complete calendar month need Form 1095-C
  • Use code 2A: Apply code 2A on Line 16 for all months after termination when the employee is not employed
  • Termination month: Report coverage that was offered or in effect during the termination month using appropriate offer and enrollment codes
  • COBRA coverage: If the terminated employee elects COBRA, report it with code 2C on Line 16 and the COBRA premium on Line 15
  • Deliver forms: Mail or electronically deliver forms to former employees by the March 3, 2026 deadline (for tax year 2025)
  • File with IRS: Include all terminated employee forms in your IRS submission by March 31, 2026 (electronic) or earlier

By following the guidance in this article and using tools like BoomTax to automate the complex aspects of terminated employee reporting, you can ensure accurate 1095-C forms for all employees—from their first day through their last.

References and Additional Resources

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