Updated October 17, 2026. Quick answer: On Form 1095-C line 16, code 2A means the employee was not employed in that calendar month and code 2B means the employee was not a full-time employee for the month. Each is entered by the employer, one code per month. The recipient instructions say line 16 gives the IRS information, and that apart from code 2C it does not affect premium tax credit eligibility.
What line 16 is for
Line 16 is the second half of the employer’s offer information. The recipient instructions say: “This code provides the IRS information to administer the employer shared responsibility provisions.” They continue: “Other than a code 2C, which reflects your enrollment in your employer’s coverage, none of this information affects your eligibility for the premium tax credit.” The code 2C case has its own page: line 16 code 2C. The whole form is mapped on Form 1095 explained.
How the codes are entered
The filer’s instructions describe the mechanics: “For each calendar month, enter the applicable code, if any, from Code Series 2.” “Enter only one code from Code Series 2 per calendar month.” If the same code fits every month: “If the same code applies for all 12 calendar months, you may enter the code in the “All 12 Months” box and not complete the monthly boxes.” And if nothing fits: “If none of the codes apply for a calendar month, leave the line blank for that month.”
The first situation on the list of Code Series 2 situations is the subject of this page: “The employee was not employed or was not a full-time employee”. The other situations on that list are covered on the pages for line 16 code 2C, line 16 codes 2D and 2E and line 16 codes 2F, 2G and 2H.
Code 2A: not employed during the month
The definition reads: “Enter code 2A if the employee was not employed on any day of the calendar month.” Two limits follow it. First: “Do not use code 2A for a month if the individual was an employee of the ALE Member on any day of the calendar month.” Second: “Do not use code 2A for the month during which an employee terminates employment with the ALE Member.”
Put simply for a reader, a 2A in a month on your form lines up with a month in which, according to the instructions, you were not an employee of that employer on any day. A month in which you worked even one day, or in which your employment ended, is a month the instructions say should not carry 2A.
Code 2A and COBRA or post-employment coverage
2A shows up in one more place in the instructions. In the rule for code 2C: “Do not enter code 2C on line 16 for any month in which a terminated employee is enrolled in COBRA continuation coverage or other post-employment coverage (enter code 2A).” If you left an employer and then enrolled in continuation coverage through it, this is the sentence that tells the employer which code to use for those months. For the retirement-age comparison of COBRA with Marketplace coverage, see COBRA versus ACA at retirement.
Code 2B: not a full-time employee
The definition has two parts. The first: “Enter code 2B if the employee is not a full-time employee for the month and did not enroll in minimum essential coverage, if offered for the month.” The second part covers an employee who left during the month: “Enter code 2B also if the employee is a full-time employee for the month and whose offer of coverage (or coverage if the employee was enrolled) ended before the last day of the month solely because the employee terminated employment during the month”. The instructions explain what the second part is aimed at in the parenthetical that follows it, in which the offer or coverage “would have continued if the employee had not terminated employment during the month”.
Notice the wording of the first part. It applies to a month in which the employee “did not enroll in minimum essential coverage”. An employee who was not full-time but did enroll falls under a different rule, described next.
2B versus 2C and 2D
The instructions explain which code wins when more than one could apply: “For any month in which an employee enrolled in minimum essential coverage, in general, indicator code 2C reporting enrollment is used instead of any other indicator code that could also apply”. Their example: “an employee could be enrolled in health coverage for a particular month during which they are not a full-time employee.” In that case the enrollment code, 2C, is the general answer, with exceptions listed on the line 16 code 2C page.
There is also a rule that keeps 2B away from new hires in a waiting stretch: “If an employee is in an initial measurement period, enter code 2D (employee in a section 4980H(b) Limited Non-Assessment Period) for the month, and not code 2B (employee not a full-time employee).” That is covered on the line 16 codes 2D and 2E page.
A note on declining coverage
Codes 2A and 2B are not a record of declining an offer. The instructions say: “There is no code to enter on line 16 to indicate that a full-time employee offered coverage either did not enroll in the coverage or waived the coverage.” If you waived coverage and your line 16 is blank for that month, this note is the one that describes the situation.
Because the codes are monthly, a form can show a mix across the year. A person who started a job mid-year, or who left one, can see different line 16 entries in different months. Other form boxes that sit nearby are on the line 15 and line 14 codes 1F, 1G and 1H pages, and the return itself is covered on Form 1040.
Edition and tax year
The 2025 Form 1095-C and the 2025 Instructions for Forms 1094-C and 1095-C were the ones read for this page. They were the current files on irs.gov on 2026-10-17. Check the tax year printed on the form you received.
Common mistakes
- Using 2A for a month in which employment ended. The instructions say “Do not use code 2A for the month during which an employee terminates employment with the ALE Member.”
- Reading 2A or 2B as a sign you declined coverage. The instructions say “There is no code to enter on line 16 to indicate that a full-time employee offered coverage either did not enroll in the coverage or waived the coverage.”
- Assuming a code on line 16 changes your premium tax credit. The recipient instructions say “none of this information affects your eligibility for the premium tax credit”, other than code 2C.
Related: COBRA versus ACA at retirement, Form 1040, ACA subsidy calculator, and First Medicare choices at 65.
Sources
- Form 1095-C (2025), Employer-Provided Health Insurance Offer and Coverage: https://www.irs.gov/pub/irs-pdf/f1095c.pdf
- 2025 Instructions for Forms 1094-C and 1095-C: https://www.irs.gov/pub/irs-pdf/i109495c.pdf
Read from the IRS documents linked above on October 17, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.