Health Coverage Tax Credit: Resources for the 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 (HCTC) or enroll in the 2017 Advance Monthly Payment (AMP) program. This 18-minute video presents a synopsis.
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.
Help Affected Individuals Claim the Health Coverage Tax Credit or Enroll in the 2017 Advance Monthly Payment Program
Individuals who qualify can choose to have 72.5 percent of qualified health insurance premiums paid monthly in advance directly to their insurance company on their behalf in 2017 to lower out-of-pocket costs for monthly premiums.
Individuals who choose not to get advance monthly payments and pay 100 percent of their health insurance premiums in 2017 can claim the HCTC when they file their federal tax return in 2018.
Help Affected Individuals Determine their Eligibility for the HCTC
Eligible for the HCTC if they are:
- An eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, or reemployment TAA (RTAA) recipient
- An eligible Pension Benefit Guaranty Corporation payee
- The family member of an eligible TAA, ATAA, or RTAA recipient or PBGC pension payee who is Medicare eligible, deceased, or who finalized a divorce with you.
Not eligible for the HCTC if they:
- Can be claimed as a dependent on another person’s federal income tax return; or,
- Are enrolled in benefits under Medicare, Medicaid, the Children’s Health Insurance Program, the Federal Employees Health Benefits Program or eligible to receive benefits under the U.S. military health system
Ensure Health Insurance Plans Qualify for the HCTC
The HCTC program does not provide health coverage. Individuals will need to have or obtain qualified health coverage. All plans that were qualified for the HCTC in 2013 qualify for the HCTC through 2019 including COBRA or spousal coverage if the employer, or former employer, did not pay 50 percent or more of the cost of coverage. A qualified health plan offered through a Health Insurance Marketplace is not qualified coverage for the HCTC for 2017.
Affected individuals should review the Instructions for Form 8885, Health Coverage Tax Credit, for information about qualified health insurance plans that are eligible for the HCTC.
Keep Health Insurance Records and Eligibility Documentation
Encourage individuals to keep the documents and records related to their eligibility to claim the credit.
- For trade certified individuals demonstrating TAA, alternative TAA, or reemployment TAA eligibility—a copy of the official letter from the Department of Labor, state workforce agency or employment office stating they are eligible for trade adjustment benefits
- For PBGC eligibility—a copy of the official letter from the PBGC stating they received a benefit paid by the PBGC or a copy of Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, from the PBGC showing they received a benefit paid by the PBGC
Affected individuals should also keep copies of their proof of insurance and payment information for insurance premiums.
Plan Ahead and Enroll Early for Advance Monthly Payments of the HCTC using Form 13441-A, HCTC Monthly Registration and Update Form, beginning Nov. 14, 2016
Eligible individuals must complete and mail Form 13441-A, HCTC Monthly Registration and Update Form with all required supporting health plan documents to the IRS to enroll. Mail Form 13441-A and all documentation to: Internal Revenue Service, Stop 6098 AUSC, Austin, Texas 78741
An incomplete form or missing documents will delay the processing of the registration.
They should keep a copy of the completed HCTC Monthly Registration and Update form and all required documents for their records.
Once the individual mails the HCTC Monthly Registration and Update form, it can take up to six weeks, if all requirements are met, before they receive registration confirmation. During this time, they must continue to pay 100 percent of their health insurance premiums directly to their health plan administrator and keep records of the payments.
Once the registration is complete and the individual is enrolled in the AMP HCTC program, they must pay 27.5 percent of their health insurance premiums in advance each month to the HCTC program through the US Bank Lockbox system. The HCTC program adds the 72.5 percent advance portion of the HCTC and sends the full payment to their health plan administrator each month.
Making the Monthly Advance Payment of the HCTC
Registered individuals will receive a letter from the IRS that will confirm their 27.5 percent monthly payment amount for their portion of the premium. You must mail Form 13973, Health Coverage Tax Credit Blank Payment Coupon with your monthly payment.
The exact payment amount is due by the 10th each month. Participants must mail Form 13973, Health Coverage Tax Credit Blank Payment Coupon with their monthly payment to US Treasury – HCTC P.O. Box 970023 St. Louis, MO 63197-0023.
If a payment is less than the exact amount due or is late, the payment will be returned and the individual is responsible for paying theunpaid premium directly to their health plan administrator. Any overpayment above the exact amount will be returned back to the participant.
Claim the HCTC
Eligible taxpayers can claim the HCTC for months that they met all eligibility requirements and made payments directly to a qualified health plan on their federal income tax return. They will follow special instructions and file Form 8885, Health Coverage Tax Credit, when they file their federal tax return.
Eligible through the Department of Labor State Workforce Agencies
Transmission of Eligible Individuals to the IRS
Effective January 1, 2017, SWAs will identify and transmit to the IRS, via the Interstate Connection Network (ICON), the information on all individuals who meet the designation of “eligible TAA or ATAA/RTAA recipients.” This is the same daily and monthly process that was in place prior to the expiration of HCTC.
ICON will remain as the communications vehicle through which states will transmit information to the IRS for HCTC purposes.
Notices of Eligibility to Participants
States provide proof of eligible TAA or ATAA/RTAA recipient status to taxpayers needing such proof for submission with their tax returns. A notice of proof of eligible TAA or ATAA/RTAA recipient status must be provided separately for each year of eligibility. States need to confirm only that the individual received a payment for any one day/week in any one month during the calendar year. States may utilize the sample letter previously used during the original implementation of the HCTC.
Provision of Rapid Response Services
The provision of early and intensive Rapid Response services is vital to the success of jobseekers in obtaining timely reemployment. Rapid Response and appropriate career services must be provided to all worker groups that file a Petition for Trade Adjustment Assistance. If the petition has already been certified when the Rapid Response services are provided, information on HCTC should be provided at that time. If the Petition is still pending at the point of the initial services, additional Trade-specific sessions should be provided when the Petition is certified.
Eligible through the Pension Benefit Guaranty Corporation
Transmission of Eligible Individuals to the IRS
Effective November 30, 2016, and each month thereafter on the 25th of the month, PBGC will identify and transmit to the IRS, the information on all individuals who meet the designation of PBGC Payee and who is in "pay status". This is the same monthly process that was in place prior to the expiration of HCTC.
Notices of Eligibility to Participants
- PBGC uses the internet and direct mailings to increase awareness of the renewed and extended HCTC program. In addition to PBGC’s HCTC webpage, its outreach efforts also include:
- Email alerts on HCTC updates; People can sign up on PBGC’s HCTC webpage.
- Retirement Matters’ blogs actively posts significant HCTC updates.
- PBGC newsletters—Retirement Recap, Retiree News, and Future Retiree News—include HCTC information, when available.
- PBGC uses direct hard copy mailings of newsletters to inform people in PBGC-trusteed plans about the HCTC.
- PBGC’s payees and people in PBGC-trusteed plans interested in the HCTC should be aware that:
- IRS will accept a copy of Form 1099-R as proof of PBGC payee status for the year for which a taxpayer is claiming HCTC.
- If an individual wishes to enroll for the Advanced Monthly Program (AMP) which begins in Jan. 2017, include a 2015 Form 1099-R (or 2016 Form 1099-R, if available. If an individual does not have this, they can include the trusteeship letter.).
For more information about HCTC, including frequently asked questions, eligibility and instructions, visit IRS.gov/HCTC.