Updated October 17, 2026. Quick answer: Code 2D on Form 1095-C line 16 marks a month in a section 4980H(b) Limited Non-Assessment Period, such as a waiting or measurement stretch for a new employee. Code 2E marks a month in which the multiemployer interim rule relief applies, which concerns union plans. Both are entries your employer makes for the IRS, and the instructions rank them against the other line 16 codes.
What these two codes are
Both belong to Code Series 2, the set that line 16 draws from. The recipient instructions describe the purpose of the line: “This code provides the IRS information to administer the employer shared responsibility provisions.” They also say: “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.” Codes 2D and 2E are therefore employer-side entries. The overview of the form is Form 1095 explained.
Code 2D: Limited Non-Assessment Period
The instruction is: “Enter code 2D for any month during which an employee is in a section 4980H(b) Limited Non-Assessment Period.” The Definitions section explains the term: “A Limited Non-Assessment Period generally refers to a period during which an ALE Member will not be subject to an assessable payment under section 4980H(a) and, in certain cases, section 4980H(b), for a full-time employee, regardless of whether that employee is offered health coverage during that period.”
An ALE Member is the employer filing the form. For a reader, the practical point is that 2D describes the employer’s status for that month under the employer shared responsibility rules, and not anything you did.
Which periods count
The Definitions section lists them. Among them are a waiting period under the monthly measurement method: “the period beginning with the first full calendar month in which the employee is first otherwise (but for completion of the waiting period) eligible for an offer of health coverage and ending no later than 2 full calendar months after the end of that first calendar month.”
Another is the first month of a job that does not start on the first: “If the employee’s first day of employment is a day other than the first day of the calendar month, then the employee’s first calendar month of employment is a Limited Non-Assessment Period.” And one is the stretch for a new employee whose hours vary: “the initial measurement period for that employee and the administrative period immediately following the end of that initial measurement period.”
The list also includes “First year as ALE period.” and a waiting period under the look-back method. The instructions note conditions on the first five periods, for example “only if the employee is offered health coverage by the first day of the first month following the end of the period.” The full list and the regulation it points to are in the Definitions section of the filer’s instructions.
2D and 2B
Someone in an initial measurement period could look like a non-full-time employee, so the instructions decide it: “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).” The 2B side is on the line 16 codes 2A and 2B page.
If you enrolled during the period
An employee can enroll during a Limited Non-Assessment Period. The Definitions-section tip about filing covers this: “if during the Limited Non-Assessment Period the employee enrolled in coverage under a self-insured, employer-sponsored plan, the ALE Member must file a Form 1095-C for the employee to report coverage information for the year.” The same tip says when no form is needed at all: “An ALE Member need not file a Form 1095-C for an individual who for each month of a calendar year is either not an employee of the ALE Member or is an employee in a Limited Non-Assessment Period with respect to section 4980H(b).”
Self-insured coverage and what Part III reports are covered on the Part III and line 17 page. The general rule that enrollment is reported with 2C instead of other codes is on the line 16 code 2C page.
Code 2E: multiemployer interim rule relief
The instruction is: “Enter code 2E for any month for which the multiemployer arrangement interim guidance applies for that employee, regardless of whether any other code in Code Series 2 (including code 2C) might also apply.” The relief is explained in the Definitions section: “An ALE Member is treated as offering health coverage to an employee if the ALE Member is required by a collective bargaining agreement or related participation agreement to make contributions for that employee to a multiemployer plan that offers, to individuals who satisfy the plan’s eligibility conditions, health coverage that is affordable and provides minimum value, and that also offers health coverage to those individuals’ dependents.”
In plain terms, a union or similar plan funded by several employers is the setting. The recipient instructions mention a related point about line 14: “If you received an offer of coverage through a multiemployer plan due to your membership in a union, that offer may not be shown on line 14.”
2E beats 2D and the safe harbor codes
The instructions rank 2E above 2D: “For an employee in a section 4980H(b) Limited Non-Assessment Period for whom the ALE Member is also eligible for the multiemployer interim rule relief for the month, enter code 2E (multiemployer interim rule relief) and not code 2D”. They also rank it above the affordability safe harbor codes: “an ALE Member eligible for the relief provided in the multiemployer arrangement interim guidance for a month for an employee should enter code 2E (multiemployer interim rule relief), and not code 2F, 2G, or 2H”. Those three codes are on the line 16 codes 2F, 2G and 2H page. And it is the reason for the exception on the line 16 code 2C page about 2C.
One more place the rules touch self-insured reporting: the Part III instructions say “employer-sponsored, self-insured health coverage does not include coverage under a multiemployer plan.” Other pages in the set that may help with context are COBRA versus ACA at retirement and ACA affordability percentage for 2026.
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
- Reading code 2D as a sign something is wrong with your coverage. It reports a period defined as one “during which an ALE Member will not be subject to an assessable payment”, and the recipient instructions say it does not affect premium tax credit eligibility.
- Assuming 2D applies to every new hire in a measurement period alongside 2B. The instructions say to enter 2D “and not code 2B (employee not a full-time employee)” in an initial measurement period.
- Overlooking that 2E outranks the other codes. The instructions say to enter 2E “regardless of whether any other code in Code Series 2 (including code 2C) might also apply”.
Related: COBRA versus ACA at retirement, ACA affordability percentage for 2026, ACA subsidy calculator, and Form 1040.
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.