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United States 

Office of 

Personnel Management 

The Federal Government’s Human Resources Agency

Benefits Administration Letter

Number: 15-204 Date: September 8 , 2015

Subject: Federal Employees Health Benefits Information to Fulfill Mandatory 

Reporting Requirements for Plan Year 2015 under Internal Revenue Code 

Sections 6056 and 4980H 

I. Background 

Beginning in 2015, employers, including Federal government employers, are subject to the 

Employer Shared Responsibility (ESR) provisions under sections 6056 and 4980H of the Internal 

Revenue Code (IRC). Employers are required to file information annually to the Internal 

Revenue Service (IRS) about the health insurance offered to eligible full-time employees and 

must also provide information to their full-time employees about their health insurance offer and 

coverage. 

Employers are required to report health insurance information for calendar year 2015 to the IRS 

by no later than February 29, 2016, or March 31, 2016, if filed electronically. If filing more than 

250 returns during the calendar year, the employer must file electronically. Employers may use 

IRS Forms 1094-C and 1095-C or a substitute form to report this information. 

Employers are required to furnish employee statements for calendar year 2015 by February 1, 

2016 (January 31, 2016, being a Sunday). Employers may use IRS Form 1095-C or a substitute 

form to furnish this information. 

II. Purpose

This Benefits Administration Letter (BAL) provides relevant information on Federal Employees 

Health Benefits (FEHB) Program coverage for all agencies providing FEHB to their employees 

to fulfill ESR reporting requirements. The Federal Government is subject to these 

requirements. For purposes of ESR provisions, your agency is the employer and is required to 

report1(See BAL 14-207 for more information on the structure of Executive agency reporting).

OPM understands that many agencies have designated their shared service center (SSC) to report 

on their behalf. Those agencies should discuss the information in this BAL with their SSC when 

applicable. 

1 There may be some agencies outside of the Executive Branch that are not required to report due to the number of 

their employees. Please see IRS guidance for further information. 
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Other OPM Guidance 

OPM has released three BALs on this topic: 

1. BAL 14-207 provides guidance on Executive agency reporting by defining an 

applicable large employer (ALE) structure and ALE member and the recommended 

method for determining full-time employee status 

2. BAL 14-212 discusses the designation of reporting responsibilities to a shared service 

center/payroll provider and provides a designation form 

3. BAL 15-202 provides links to IRS resources. 

These BALs can be accessed at http://www.opm.gov/esr. This site also has links to a previously 

recorded webcast, Frequently Asked Questions (FAQs) for agencies, payroll providers and 

FEHB enrollees. OPM will continue to update this site with additional information as it becomes 

available. 

IRS Webinars 

The IRS has conducted a series of webinars on ESR and information reporting. The webinars 

have been designed for business owners, tax managers, employee benefits managers and health 

coverage providers. More information about these webinars and how to register is available on 

the IRS website. 

III. Minimum Essential Coverage, Minimum Value, and Affordability Standard 

Employers must offer health coverage that is considered “minimum essential coverage” 

providing “minimum value” and is “affordable” to their full-time employees. OPM has 

previously released guidance on “minimum essential coverage” and “minimum value” for 

purposes of FEHB. See below. 

A. Minimum Essential Coverage and Minimum Value 

 All FEHB plans are eligible employer-sponsored plans and provide “minimum essential 

coverage” for 2015 and every year thereafter. See BAL 13-205 for more information. 

 All FEHB plans meet the “minimum value standard” for 2015. OPM will let you know if 

this changes in future years. See BAL 13-206 for further information. 

B. Affordability 

Health coverage is considered affordable when the employee’s share of the premium for the selfonly coverage offered to the employee would cost the employee less than 9.5% of that 

employee’s annual household income. Employers are instructed to use the lowest-cost monthly 

premium for self-only coverage that is offered to the employee. For purposes of ESR reporting 

for calendar year 2015, the lowest cost plan will in most cases be the NALC Value Option, 

enrollment code KM1. The NALC Value Option is the nationwide plan with the lowest cost 
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share for the employee at $93.382per month or $1120.60 per year. 

a. Affordability Safe Harbors 

Since employers generally will not know their employees’ household incomes, employers can 

take advantage of one or more of the three IRS affordability safe harbors to determine whether 

coverage is affordable. The employer may choose to apply these safe harbors for any reasonable 

category of employees, provided it does so on a consistent basis. The three affordability safe 

harbors are: form W-2 safe harbor, rate of pay safe harbor and the federal poverty line safe 

harbor. 

For calendar year 2015, the NALC Value Option meets the threshold for the Form W-2 safe 

harbor for all employees working a 40 hour work schedule and employed as a Grade 1, Step 1 on 

the General Schedule. For calendar year 2015, the NALC Value Option may meet the threshold 

for the rate of pay safe harbor for hourly employees depending on the number of hours worked 

and their hourly rate. However, for calendar year 2015, the NALC Value Option does not meet 

the threshold for the federal poverty line safe harbor. 

SSCs should have their systems programmed to properly code for the affordability safe harbors. 

Those agencies that are not using an SSC are encouraged to read more about the affordability 

safe harbors in sections 54.4980H-4 and 54.4980H-5 of the IRS regulations. Further information 

on the safe harbors can be requested at ESR@opm.gov. 

b. Part-Time Employees 

For purposes of ESR provisions, employees working 30 hours per week or 130 hours per month 

are considered full-time employees. Under the Federal Employees Part-Time Career 

Employment Act, employees working 16 to 32 hours a week are considered part time. This 

means that federal part-time employees working 30-32 hours per week are considered full-time 

for purposes of ESR provisions and must be reported. 

Under current law, these employees are entitled to a partial Government contribution for FEHB 

coverage prorated to the number of hours worked. Therefore, these employees may not have 

health care that is considered affordable for purposes of ESR provisions. 

Example: Mary works 30 hours per week and is a GS-3, Step 1. Mary is entitled to 75% of the 

government contribution of a full-time employee. Mary’s share of the NALC Value Option 

premium is $163.42 per month. Mary’s share does not meet any of the affordability safe harbors, 

therefore Mary’s FEHB coverage is not considered affordable. 

c. Regional Low Cost Plans 

Certain regional FEHB plans have a lower enrollee cost than the NALC Value Option for 

calendar year 2015. These premium amounts should be considered when determining 

affordability for individuals living in geographic areas where these plans are available. A chart of 

 

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 This applies to all non-postal rates. 
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these plans is below:

Plan Name Code Option 2015 

Enrollee 

Share

TakeCare KX HDHP $48.23

Kaiser Foundation Health Plan of 

Colorado

N4 BASIC $77.83

Humana Health Plans of Puerto Rico, 

Inc.

ZJ HIGH $82.33

AultCare HMO 3A HDHP $89.03

Coventry Health Care of Iowa SV HDHP $89.24

Kaiser Foundation Health Plan of 

Hawaii

63 STANDARD $91.15

Calvo's SelectCare B4 STANDARD $91.39

Altius Health Plans 9K HDHP $91.40

HealthPartners V3 STANDARD $91.64

TakeCare JK STANDARD $93.12

NALC Health Benefit Plan KM VALUE $93.38

IV. Certification of Eligibility 

Alternative methods of reporting under section 6056 were developed by the IRS to offer a 

simplified method of employer reporting. Both methods are consistent with the statutory 

requirements to file an information return with the IRS and furnish an employee statement to 

each full-time employee. These alternative reporting methods, the qualifying offer method and 

the 98% method, may permit employers to provide less detailed information than under the 

general method for reporting. Employers choosing these methods must meet certain conditions.3

The qualifying offer method is not applicable to agencies.

A. Qualifying Offer Method 

Under this method, the employer certifies on the Form 1095-C that it made a qualifying offer of 

minimal essential coverage to its full-time employees for all months during the year in which the 

employee was a full-time employee. A “Qualifying Offer” is an offer that satisfies all of the 

following criteria:

 an offer of minimum essential coverage that provides minimum value;

 an offer of minimum essential coverage is also made to the employee’s spouse and 

dependents; and,

 the employee cost for employee-only coverage for each month does not exceed 9.5 

percent of the mainland single federal poverty line divided by 12.

 

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 The conditions are described in detail in Subsections A through D of Section X in the preamble to the section 6056 

regulations and in the draft 2015 instructions for Forms 1094-C and 1095-C. 
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FEHB plans meet the first and second requirements for the 2015 reporting year. For 2015, the 

NALC Value Option does not meet the third requirement. Therefore, agencies using the NALC 

Value Option for their employees should not use this method for the 2015 reporting year. In 

future years, FEHB plans may meet this threshold depending on premium rates. 

B. 98% Method 

Employers that offered affordable health coverage providing minimum value coverage to all or 

nearly all of their employees and can accurately report that the only employees they do not offer 

coverage to are not full-time employees may use the 98% offer method. Under the 98% offer 

method, employers are permitted to report under section 6056 without having to determine which 

employees are actually full-time for purposes of section 4980H. An employer must certify on its 

transmittal form that it offered, for all months of the calendar year, affordable health coverage 

providing minimum value to at least 98% of its employees and their dependents for whom it is 

filing a Form 1095-C employee statement. If an employer uses this method, it is not required to 

complete the “Full-Time Employee Count” in Part III, column (b).4

Since the level is set at 98 percent, this helps ensure that the employer has offered coverage to at 

least 95 percent of its full-time employees and is not subject to an assessable payment under 

section 4980H(a) without knowing which reported employees are full-time and which are parttime. Note, however, that the 98% method does not exempt the employer from any penalties that 

might apply for failure to report with respect to any full-time employee, and reporting is still 

required under the normal rules for all full-time employees. 

For purposes of FEHB, agencies may use this method if 98% of their full-time employees have 

been offered affordable health insurance. As mentioned, all FEHB plans meet minimum essential 

coverage and provide minimum value. Agencies should review their workforce, specifically 

regarding part time employees that are considered full time for purposes of the IRC provisions to 

determine whether they should use this method. Agencies that have designated their SSC to 

report on their behalf must certify to their SSC that this is the case for their agency if they choose 

to use this method. Agencies must also retain records and proof of the analysis used to conclude 

the 98% method is available. 

V. Other Reporting Information 

A. Dependent Information 

FEHB carriers will provide information about the dependents of covered individuals, as they 

must file and furnish Form 1095-B statements for all enrollees and their covered dependents. 

 

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See IRS draft 2015 Instructions for Forms 1094-C and 1095-C. 
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B. Agencies with Payroll Separate from their Executive Cabinet-level 

Department 

According to OPM guidance under BAL 14-207, all Executive cabinet-level agencies must 

report as a single entity, rather than on an individual sub-component basis. There are some 

agencies that use a different payroll provider than their cabinet-level department. 

These agencies must coordinate with their Department for purposes of ESR reporting 

requirements. These agencies have two options: 

1) file 1095-Cs and 1094-C or 

2) work with Department payroll provider to report on the agency’s behalf. 

If the agency chooses the first option, the agency must use the Department level Employer ID 

Number (EIN). On line 19 of the 1094-C, this is NOT an authoritative transmittal (box 

unchecked). The agency must provide information on full-time employee and total employee 

count to OPM (for the 2015 mandatory reporting year). 

VI. Certification 

OPM is continuing to work closely with agencies and Shared Service Centers to facilitate 

employer shared responsibility reporting. OPM expects agencies and SSCs will perform a final 

readiness check of reporting capabilities in November 2015 and will certify readiness to OPM by 

November 30, 2015 to ESR@opm.gov. 

If you have any questions regarding this Benefits Administration Letter please contact Rachel 

Royster, Senior Policy Analyst, Planning and Policy Analysis, at 202.606.4181 or email 

ESR@opm.gov.

 Sincerely, 

 

John O’Brien

Director