1. Employee Management
  2. Employees
  3. Compliance
  4. Affordable Care Act (ACA) Reporting
  5. Adding Safe Harbor Codes to an Employee

Adding Safe Harbor Codes to an Employee

Safe harbor codes apply when an employee qualifies for an exemption from the assessable payment. Manual entry is not required for employees that were not full-time, terminated, excluded from ACA, or in a limited non-assessment period. Instead, the applicable safe harbor code is automatically added when generating the ACA filing. Manual entry is required when safe harbor codes 2E, 2F, 2G, or 2H are applicable or if an existing code must be overridden.

For more information about safe harbor codes, see https://www.irs.gov/instructions/i109495c and Automatically Applied Safe Harbor Codes.

Automatically Applied Safe Harbor Codes

The following are automatically applied safe harbor codes:

  • 2A - Automatically added for any months that an employee was not employed on any day of the calendar month. This includes employees who were not yet hired, excluded from ACA, or terminated before the first day of the reporting month.

  • 2B - Automatically added for any months that an employee was not considered full-time. This includes employees who were excluded from ACA or terminated during the reporting month.

  • 2C - Can be applied automatically when assigning an ACA offer of coverage plan to multiple employees. For more information, see Assigning an ACA Offer of Coverage Plan to Multiple Employees.

  • 2D - Automatically added for any months that an employee was in a limited non-assessment period.

To add safe harbor codes to an employee:

  1. Go to Payroll and HR > Lists > Employees (Payroll Manager).

  2. On the Employees list, click Edit next to the employee you want to add a safe harbor code to.

  3. Click the Affordable Care Act (ACA) subtab.

  4. Click the Safe Harbor Codes subtab.

  5. From the Code list, select the safe harbor code.

    The safe harbor codes include:

    • 2A. Employee not employed during the month. This safe harbor code is automatically applied during filing.

    • 2B. Employee not full–time. This safe harbor code is automatically applied during filing.

    • 2C. Employee enrolled in coverage offered. Use this code for any month the employee enrolled for each day of the month in health coverage offered by the ALE member. This is true regardless of whether any other code in Code Series 2 might also apply.

      Do not use this code:

      • For any month in which the multi-employer interim rule relief applies. Instead, enter code 2E.

      • If code 1G is entered in the Code list on the ACA offer of coverage plan. For more information, see Creating an ACA Offer of Coverage Plan.

      • For any month that an employee is enrolled in COBRA continuation coverage or other post-employment coverage. Instead, enter code 2A.

      • For any month that the employee enrolled in coverage that was not minimum essential coverage.

    • 2D. Employee in a Section 4980H (b) limited non-assessment period. This safe harbor code is automatically applied during filing.

    • 2E. Multi-employer interim rule relief. Use this code for any month for which the multi-employer arrangement interim guidance applies for that employee. This is true regardless of whether any other code in Code Series 2 (including code 2C) might also apply.

    • 2F. Section 4980H affordability from W-2 safe harbor. Use this code if the ALE member used Section 4980H Form W-2 safe harbor to determine affordability. This is for purposes of Section 4980H(b) for this employee for the year. If the member uses this safe harbor, it must be used for each month of the calendar year the employee is offered health coverage.

    • 2G. Section 4980H affordability federal poverty line safe harbor. Use this code if the ALE member used Section 4980H federal poverty line safe harbor to determine affordability. This is for purposes of section 4980H(b) for this employee for any months.

    • 2H. Section 4980H affordability rate of pay safe harbor. Use this code if the ALE member used Section 4980H rate of pay safe harbor to determine affordability. This is for purposes of Section 4980H(b) for this employee for any months.

  6. Enter the Start Month and Start Year of the period when the exemption applied for the employee. Enter the End Month and End Year if this code applied for a short period of time. Note that this date cannot be before the employee’s hire date.

  7. Click Add.

  8. Click Save.

Related Topics

General Notices