Health Coverage Tax Credit HCTC

The Health Coverage Tax Credit is a tax credit that pays 72.5% of qualified health insurance premiums for eligible individuals and their families. Instructions for claiming the HCTC for 2015. To claim the HCTC for 2015, file Form 8885, Health Coverage Tax Credit, with your 2015 income tax return. Follow the 2015 Instructions for Form 8885 to figure your HCTC.

 

Using Form 8885 to figure your Health Coverage Tax Credit HCTC

If you were an eligible trade adjustment assistance recipient, alternative TAA recipient, reemployment TAA recipient, Pension Benefit Guaranty Corporation pension payee, or a qualifying family member, you may be able to claim the Health Coverage Tax Credit for qualifying health insurance coverage during 2015 when you file your income tax return.

 

Changes to Form 8885 and Health Coverage Tax Credit for 2015

Important changes to the HCTC for 2015. Eligibility for the HCTC in 2015 is generally the same as before the credit was reauthorized in 2015. However, three major changes were made.

  • You must make an election to claim the HCTC for a month during which you were eligible for the HCTC. Once you elect to claim the HCTC, you can’t claim the premium tax credit for the same coverage in that month or in any subsequent months during the year in which you’re eligible to claim the HCTC. You may need to report an excess advance premium tax credit repayment on Form 8962, Premium Tax Credit, if advance payments of the premium tax credit were made for you, your spouse, or a dependent in 2015.
  • You may claim the HCTC for all qualified health plans offered through a Health Insurance Marketplace in addition to all plans that were previously qualified.
  • You no longer have to be enrolled in non-group (individual) coverage for at least 30 days before you became eligible for the HCTC in order for your coverage to be qualified health insurance for the HCTC.

 

Who can claim the Health Coverage Tax Credit?

You may only elect to take the HCTC if you are one of the following:

  • An eligible trade adjustment assistance (TAA) recipient, alternative (ATAA) recipient, reemployment (RTAA) recipient.
  • An eligible Pension Benefit Guaranty Corporation (PBGC) pension payee.
  • The family member of a TAA, ATAA, or RTAA recipient or PBGC pension payee who is deceased or who finalized a divorce with you.

You are not eligible if you could have been claimed as a dependent on another person’s federal income tax return.

Claiming Dependents on Form 8962

If you or anyone claimed on your federal income tax return received the benefit of advance payments of the premium tax credit in 2015, you must report the payments on Form 8962, Premium Tax Credit, and follow specific instructions to reconcile the advance payments. See the instructions for Form 8885 and Publication 974, Premium Tax Credit, for more information.

 

What health insurance plans qualify for the Health Coverage Tax Credit?

All plans that were previously qualified for the HCTC qualify for the HCTC through 2019.

  • For 2014 and 2015 only: qualified coverage includes qualified health plans offered through a federally facilitated or a state-based Health Insurance Marketplace.
  • For 2016 and beyond: Health Insurance Marketplace coverage will no longer be qualified coverage for the HCTC.

Be sure to review the Instructions for Form 8885 for information about qualified health insurance plans that are eligible for the HCTC in 2014, 2015 and 2016.

 

How do I Claims the HCTC for 2016?

You may only elect to take the HCTC if you are one of the following:

  • An eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, reemployment TAA (RTAA) recipient.
  • An eligible Pension Benefit Guaranty Corporation pension payee.
  • The family member of an eligible TAA, ATAA, or RTAA recipient or PBGC pension payee who is deceased or who finalized a divorce with you.

You are not eligible if you could have been claimed as a dependent on another person’s federal income tax return.

 

How do I claim HCTC for 2015?

File Form 8885, Health Coverage Tax Credit with your 2015 income tax return and elect HCTC when you file. Follow special instructions, for filing your tax return to elect HCTC. Attach documentation about your HCTC eligibility, that your 2015 health plan was qualified and that the premiums claimed for your 2015 coverage were paid.

Follow special instructions, if you or anyone claimed on your federal income tax return enrolled in 2015 Marketplace coverage and received the benefit of advance payments of the Premium Tax Credit in 2015. You must reconcile the advance payments on Form 8962, Premium Tax Credit. See the Questions and Answers and Instructions for Form 8885 for more information.

How do I claim HCTC for 2014?

File an amended tax return using Form 1040X and Form 8885, Health Coverage Tax Credit. Follow special instructions for amending your tax return to elect the HCTC.
Attach documentation that proves your HCTC eligibility, that your 2014 plan was qualified and that the premiums claimed for your 2014 coverage were paid. Claimed or reconciled the Premium Tax Credit in 2014? You must follow additional instructions to claim the HCTC. Refer to these Questions and Answers for more information.

 

The Trade Preferences Extension Act of 2015

The Trade Preferences Extension Act of 2015 (Public Law 114-27), enacted June 29, 2015, extended and modified the expired Health Coverage Tax Credit. Previously, those eligible for the HCTC could claim the credit against the premiums they paid for certain health insurance coverage through 2013.

The HCTC can now be claimed for coverage through 2019. The IRS continues to work with its partners, the Pension Benefit Guaranty Corporation, the Department of Labor and State Workforce Agencies to ensure that all eligible taxpayers receive this important credit.