United States Office of 

Personnel Management 

The Federal Government’s Human Resources Agency

Benefits Administration Letter

Number: 16- 205 Date: May 2, 2016 

 Updated July 28, 2016 

Subject: Information to Fulfill Mandatory Reporting Requirements for Plan Year 2016 under 

Internal Revenue Code Sections 6056 and 4980H

 

I. Background 

Employers, including Federal agencies, are subject to the Employer Shared Responsibility (ESR) 

provisions under sections 6056 and 4980H of the Internal Revenue Code (IRC). The Internal Revenue 

Service (IRS) requires Applicable Large Employers (ALEs) to file information returns on or before 

February 28 (March 31 if filed electronically) following the calendar year for which the offer of coverage 

is reported. ALEs are also required to furnish statements to each full-time employee about the health 

coverage the agency offered on or before January 31 of the year following the calendar year the offer was 

made. 

OPM, in its role as administrator of the Federal Employees Health Benefits (FEHB) Program, has been 

working closely with Federal agencies and Shared Service Centers (SSCs) as many agencies have 

designated their SSCs to report on their behalf. 

Purpose 

This Benefits Administration Letter (BAL) provides preliminary information to assist Federal agencies

for reporting year 2016. We will provide additional information for reporting year 2016 as it becomes 

available. This BAL provides updates on affordability safe harbors and the lowest cost FEHB plan for the 

2016 plan year. OPM releases guidance each year to inform agencies of specific requirements for the 

following reporting year. Please refer to BAL 15-204 for comprehensive guidance on IRC 6056 reporting. 

Based on the 2015 reporting year experience, we have updated the list of agencies within OPM’s 

determined ALE, as defined in this BAL (see attachment) and BAL 14-207. 

ALE and ALE Members

In BAL 14-207, OPM provided definitions of the ALE and ALE member. These definitions serve as the 

criteria for determining whether an agency is in or outside of OPM’s determined ALE, and are as follows: 

ALE: The ALE is the group of civilian, non-Postal, executive agencies that are permitted by 

statute to participate in the FEHB Program. 
2 

ALE Member: ALE members are Cabinet level Departments, independent agencies, boards 

and commissions that make up the ALE. 

Following these definitions, each Cabinet level Department, independent agency, board and commission 

is responsible for reporting the required information on its full-time employees to the IRS and reporting 

necessary information to full-time employees. The attached list includes agencies which fall under this 

definition and has been updated from the original list released in 2014. It does not include sub-agencies of 

each organization. 

IRS Required Deadlines 

For calendar year 2016 (health coverage in 2016), agencies must furnish Forms 1095-C to full-time 

employees on or before January 31, 2017. Agencies must file IRS Forms 1094-C and 1095-C with the 

IRS by February 28, 2017 if filing on paper, or March 31, 2017 if filing electronically.

II. Affordability 

Health coverage is considered affordable when the employee’s share of the premium for the self-only 

coverage offered to the employee would cost the employee less than 9.66% of that employee’s annual 

household income. The IRS adjusts the applicable percentage for each plan year.1 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 2016, 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 share for the employee at $93.382 per month or $1,120.56 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 2016, the NALC Value Option meets the threshold for the Form W-2 safe harbor for 

employees working a 40 hour work schedule and employed as a Grade 1, Step 1 on the General Schedule. 

It 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. It meets 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 as it 

relates to the FEHB Program can be requested at ESR@opm.gov. 

 

1

 See QA12, IRS Notice 2015-87; Rev. Proc. 2014-62. According to Rev. Proc. 2016-24, the applicable percentage

increases to 9.69% for plan year 2017.

2

 This applies to all non-postal rates. 
3 

B. Regional Low Cost Plans 

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

2016. These premium amounts should be considered when determining affordability for individuals living 

in geographic areas where these plans are available. A chart of these plans is below: 

Plan Name Code Option 2016 Enrollee Share 

(monthly premium rate)

Guam TakeCare KX1 HDHP Self $41.37 

Health Net of California P61 Basic Self $71.94 

Ohio AultCare HMO 3A4 HDHP Self $78.71 

Humana Health Plans of Puerto Rico, Inc. ZJ1 High Self $87.66 

Kaiser Foundation Health Plan of Colorado N41 Basic Self $87.75 

Guam Calvos Selectcare B44 Standard Self $89.12 

Guam TakeCare JK4 Standard Self $90.58 

Aetna Health of Utah Inc. 9K4 HDHP Self $92.23 

NALC Health Benefit Plan KM1 Basic Self $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. These alternative reporting methods, the qualifying offer method and the 

98% method, were described in a prior BAL and may permit employers to provide less detailed 

information than under the general method for reporting. Employers choosing these methods must meet 

certain conditions, as explained in BAL 15-204.3 The qualifying offer method and 98% method are

applicable to agencies for calendar year 2016. 

For 2016, the NALC Value option is again the lowest cost nationwide plan within the FEHB. However, 

the enrollee portion of the self only premium for the NALC Value option does not exceed 9.66% of the 

mainland single federal poverty line. Therefore, this method can be used in 2016. This is a change from 

last year’s BAL 15-204, as the NALC Value Option did not meet all the requirements for the qualifying 

offer method. For calendar year 2016, it does meet all requirements and agencies using the NALC Value 

Option for their employees may use the qualifying offer method. 

If you have any questions regarding this Benefits Administration Letter, please contact Julia Elam at 

202.606.1560 or email ESR@opm.gov. 

 Sincerely,

 

John O’Brien 

Director

Attachment

 

3 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 2015 instructions for Forms 1094-C and 1095-C.