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Claiming the Health Coverage Tax Credit for Tax Year 2015

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.

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.

Instructions for claiming the HCTC for 2015. If you have not filed your tax year 2015 federal tax return, you can claim the HCTC for 2015, when you file your 2015 income tax return. You must file Form 8885, Health Coverage Tax Credit, with your return.

Amending Your 2015 Tax Return to Claim the HCTC. If you have already filed your 2015 tax return and did not claim the 2015 Health Coverage Tax Credit at that time, you can file Form 1040X, Amended U.S. Individual Income Tax Return, to amend your original 2015 tax return to claim the HCTC using Form 8885, Health Coverage Tax Credit. Write “HCTC” in large, bold letters at the top of page 1 of the Form 1040X. Check the box for Form 8885 on Form 1040X and attach the tax year 2015 Form 8885, Health Coverage Tax Credit.

Follow the 2015 Instructions for Form 8885 to figure your HCTC and submit proof of eligibility if you are filing Form 8885 to claim the HCTC.using Form 1040 or Form 1040X.  

Election to take the HCTC. You must elect the HCTC to take the HCTC. For 2015, make your election by checking the box on Form 8885, line 1, for the first eligible coverage month you are electing to take the HCTC. You must also check all boxes on line 1 for each coverage month after the election month for which you’re eligible to take the HCTC. The election doesn’t apply to any coverage month for which you are not eligible to take the HCTC.

Proof of eligibility. You are required to attach certain documents that prove that you were eligible to claim the credit, that your 2015 health insurance plan was qualified, and that the premiums claimed for your 2015 coverage were paid. This proof must include:

  1. An official letter reflecting your eligibility for the months claimed in 2015:
    • For trade certified individuals demonstrating TAA, alternative TAA, or reemployment TAA eligibility—a copy of the official letter from the Department of Labor, your state workforce agency or employment office stating you are eligible for trade adjustment benefits
    • For PBGC eligibility—a copy of the official letter from the PBGC stating you received a benefit paid by the PBGC or a  copy of your Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, from the PBGC showing you received a benefit paid by the PBGC
  2. For each month you are claiming the credit for 2015 you must also provide:
    • Proof of insurance and
    • Proof of payment for insurance premiums

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.

Refer to IRS.gov/HCTC, the Instructions for Form 8885 and Questions and Answers for more information about how to claim the HCTC when you file your 2015 return.