Health Coverage Tax Credit
The Health Coverage Tax Credit is a tax credit that pays 72.5 percent of qualified health insurance premiums for eligible individuals and their families. The HCTC acts as partial reimbursement for premiums paid for qualified health insurance coverage and can now be claimed for qualified coverage through 2019.
You may be eligible to elect the HCTC only if you are one of the following:
- An eligible trade adjustment assistance recipient, alternative TAA recipient or reemployment TAA recipient,
- An eligible Pension Benefit Guaranty Corporation payee, or
- The family member of an eligible TAA, ATAA, or RTAA recipient or PBGC payee who is deceased or who finalized a divorce with you.
You are not eligible for the HCTC if you:
- Can be claimed as a dependent on another person’s federal income tax return or
- Are enrolled in Medicare, Medicaid, the Children’s Health Insurance Program, or the Federal Employees Health Benefits Program or are eligible to receive benefits under the U.S. military health system (TRICARE)
Qualifying Health Insurance Coverage
The HCTC program does not provide health insurance coverage. You will need to have or obtain qualified health insurance coverage. All plans that were qualified for the HCTC in 2013 qualify for the HCTC through 2019. This includes COBRA or spousal coverage if the employer, or former employer, did not pay 50 percent or more of the cost of coverage. Individual (private and non-group) health insurance that you purchase for yourself or your family from an insurance company, agent, or broker are also included.
A qualified health plan offered through a Health Insurance Marketplace is not qualified coverage for the HCTC for 2016 and 2017. If you are eligible to claim the Health Coverage Tax Credit and enrolled in Marketplace coverage for 2016 and 2017, see our questions and answers about qualifying coverage for more information.
Advance Monthly Payments Available for Tax Year 2017
The benefit of the Health Coverage Tax Credit will be offered on a monthly basis for 2017. If you qualify, you can choose to have 72.5 percent of your qualified health insurance premiums paid in advance directly to your health plan administrator each month on your behalf to lower your out-of-pocket payments for your monthly premiums
- Enrolling in 2017 Advance Monthly Payments of the Health Coverage Tax Credit
- Questions and Answers about enrolling in 2017 Advance Monthly Payments of the Health Coverage Tax Credit
If you don’t request advance monthly payments and instead pay 100 percent of your health insurance premiums in 2017, you can claim your HCTC when you file your federal income tax return in 2018. This will increase your refund or lower the amount of tax that you would otherwise owe.
2017 Advance Monthly Payments Registration
You must complete and mail Form 13441-A, HCTC Monthly Registration and Update, with all required supporting documents to the IRS to enroll. Keep a copy of the completed HCTC Monthly Registration and Update form and all required documents for your records.
Once your registration is complete and you are enrolled in the AMP HCTC program, you must pay 27.5 percent of your health insurance premiums in advance to the HCTC program through the US Bank Lockbox system by the 10th day of each month. The HCTC program then adds the 72.5 percent advance portion of the HCTC and sends the full payment to your health plan administrator each month.
Claiming the Health Coverage Tax Credit
Review the special filing instructions and documentation requirements that affect tax years 2014, 2015 and 2016 to claim the HCTC.
Interim Process for Advance Monthly Payments for 2016
In general, eligible taxpayers will claim the HCTC for 2016 when they file their federal income tax returns in 2017. However, the IRS implemented a limited interim process for making advance monthly payments through December 2016. This process is only available to individuals for months they are enrolled in qualified health insurance coverage and their Health Plan Administrator or a Third Party Administrator that was willing to meet certain IRS requirements and enter into a Memorandum of Understanding (MOU) with the IRS.
The MOU detailed the activities participating HPA/TPAs need to perform in order to enable the IRS to make monthly payments prior to January 2017 for the participants they represent.
A Health Plan Administrator or a Third Party Administrator may inquire about or indicate their interest in participating in this process by sending an email to *firstname.lastname@example.org. Instructions for individuals who can potentially benefit from this process will be provided by participating HPA/TPAs to their members or clients.
Pension Benefit Guaranty Corporation, the Department of Labor and State Workforce Agencies
Find resources you need to help affected individuals claim the Health Coverage Tax Credit or enroll in the 2017 Advance Monthly Payment program.
Health Plan Administrators or Third Party Administrators
Review the requirements for participation in the 2017 Advance Monthly Payment program.
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 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 have the opportunity to receive this important credit.