1095-C Line 14 & Line 16 codes: the 226-J code reference
The Letter 226-J reconciliation is a code check: the IRS's Form 14765 carries the Line 14 and Line 16 codes from each listed employee's Form 1095-C, and those codes decide which months are assessable. Here's every code, what it means, and how it reads on the 14765.
Line 14: the offer-of-coverage codes (1A–1U)
Line 14 describes what was offered to the employee each month:
- 1A–1F — offers of coverage, varying by who is covered and whether the offer provides minimum value. 1F marks an offer that did not provide minimum value.
- 1G — offer made to an individual who was not full-time for that month.
- 1H — no offer of coverage was made. This is the code most directly tied to §4980H(a) exposure.
- 1J / 1K — conditional offers of minimum essential coverage providing minimum value.
- 1L–1U — individual coverage HRA (ICHRA) offers, with affordability varying by ZIP-code basis — a series many summaries omit.
A month coded 1H for an employee who was actually offered affordable coverage is a coding error that the corrected 14765 matrix should reflect with the correct code.
Source: IRS — Instructions for Forms 1094-C and 1095-C.
Line 16: the relief and safe-harbor codes (2A–2H)
Line 16 carries the codes that relieve a month from the payment, regardless of whether the employee received a premium tax credit:
- 2A — employee not employed during the month.
- 2B — employee not a full-time employee.
- 2C — employee enrolled in the coverage offered.
- 2D — employee in a limited non-assessment period.
- 2E — multiemployer interim relief.
- 2F / 2G / 2H — the three affordability safe harbors: W-2, federal poverty line, and rate of pay.
Each relief code is a fact to verify against payroll and benefits records for the month it covers. The safe-harbor codes require the affordability computation — formulas and year-by-year figures are in the safe-harbor checker.
Sources: IRS — Instructions for Forms 1094-C and 1095-C; Form 14765 (IRS PDF).
The XF / XG / XH overrides
On the 14765 you may see XF, XG, or XH where you expected 2F, 2G, or 2H. Per the form's instructions, that marking means the IRS determined the safe harbor you claimed does not apply for that month. If you maintain the safe harbor applies, the instructions say to provide your computation with the written request for reconsideration — attach the math.
Source: Form 14765 (IRS PDF).
Reading the codes on the 14765
The 14765 lists each assessable employee with the Line 14/16 codes from their Form 1095-C and twelve monthly indicator boxes. The form's governing rule:
In practice: a month carrying a 2A–2H code is relieved; a month with no relief code and an unhighlighted indicator is the month to verify — offer code, full-time status, PTC data, and safe-harbor math. The month-by-month method is 14765 reconciliation, explained, and the full response sequence is How to answer Letter 226-J, step by step.
Common questions
1H means no offer of coverage was made for that month. It is the Line 14 code most directly tied to §4980H(a) exposure — the payment track that applies when the employer did not offer coverage to at least 95% of full-time employees.
They are the three affordability safe harbors: 2F is the W-2 safe harbor, 2G is the federal poverty line safe harbor, and 2H is the rate-of-pay safe harbor. Each compares the employee's required contribution for self-only coverage against an indexed affordability percentage of a different income measure.
XF means the IRS determined the 2F (W-2) safe harbor you claimed does not apply for that month (XG and XH are the equivalents for 2G and 2H). The 14765 instructions say that if you maintain the safe harbor applies, you provide your computation with the written request for reconsideration — attach the math.
All of them: 2A (not employed), 2B (not full-time), 2C (enrolled in coverage), 2D (limited non-assessment period), 2E (multiemployer relief), and the three affordability safe harbors 2F/2G/2H. A month carrying any of these codes is relieved from the ESRP regardless of the premium tax credit.
Not directly: 972CG penalty reason codes (PRNs) identify filing failures (late, incorrect, non-electronic, bad TIN), not offer or relief codes. But mis-coded Line 14/16 entries are often the underlying information-return errors you correct during a 972CG response — see Correcting 1095-Cs after Notice 972CG.
This guide is general information, not legal or tax advice. Statutes and IRS pages change — verify against the sources linked above.