The HCTC program does not provide health insurance coverage. You will need to have or obtain qualified health insurance coverage.
There are several types of health insurance that qualify for the HCTC beginning January 1, 2016. However, contributions by your employer or your spouse’s employer may limit qualification.
- Coverage under a COBRA continuation provision if the former employer did not pay 50 percent or more of the cost of coverage;
- Coverage under a group health plan available through the employment of your spouse, if the employer did not pay 50% or more of the cost of coverage;
- Coverage under an employee benefit plan funded by a voluntary employees’ beneficiary association (VEBA) that was established through the bankruptcy of your former employer;
- Coverage obtained in the non-group (individual) health insurance market other than coverage offered through the Health Insurance Marketplace; and
- Coverage under certain state-qualified health plans established prior to January 1, 2014.
A qualified health insurance plan for the HCTC does not include:
- Health Insurance Marketplace coverage, or
- Flexible spending or similar arrangements
- Any insurance if substantially all of its coverage is of excepted benefits described in section 9832(c) of the Internal Revenue Code (see question 2)
Review the instructions for Form 8885, Health Coverage Tax Credit, for information about qualified health insurance coverage that is eligible for the HCTC.
Dental or vision insurance only qualifies for the HCTC if it is part of a non-elected comprehensive package.
- If you are given the opportunity to “opt out” of dental or vision coverage, it must be excluded from the HCTC benefits claimed.
- If dental or vision benefits represent substantially all of the coverage in a comprehensive package, the package is not eligible for the HCTC.
If, on the first day of the month, either of the following applies, you cannot claim the HCTC for that month:
- You were covered by an employer-sponsored health insurance plan (including any employer-sponsored health insurance plan of a spouse) and the employer paid 50% or more of the cost of coverage.
- You are an Alternative Trade Adjustment Assistance (ATAA) or Reemployment Trade Adjustment Assistance (RTAA) recipient and you were eligible for certain kinds of coverage (including any employer-sponsored health insurance plan of your spouse) where the employer would have paid 50% or more of the cost of the coverage.
- You are an ATAA or RTAA recipient and you were covered by certain kinds of coverage (including any employer-sponsored health insurance plan of your spouse) where the employer paid any part of the cost of coverage.
Any amounts contributed to the cost of coverage by you or your spouse on a pre-tax basis are considered to have been paid by the employer.
If you are eligible for both the HCTC and the premium tax credit (PTC), you should compare the out-of-pocket costs and benefits of Marketplace plans against the HCTC-qualified health insurance plans to determine which you prefer.
Marketplace coverage isn’t qualifying insurance for the HCTC; you will be able to claim only the PTC for your Marketplace coverage.
Yes, with the following restrictions:
- You cannot claim both the HCTC and the PTC (or advance payments of the PTC) for the same coverage for the same coverage months.
- Once you elect to take the HCTC for any month in a year, the election to take the HCTC applies to all subsequent eligible coverage months in the same year for the same coverage.
- If you enrolled in Health Insurance Marketplace coverage for any month during the year, you must reconcile any advance payments of the premium tax credit paid when you file your tax return.
If it is possible for you to switch into HCTC-qualified health coverage, check with your coverage provider to ensure no gap in coverage would result from terminating your Marketplace coverage.
Yes. Your HCTC election applies only to subsequent months in the same year.
Your health insurance administrator must elect to participant in the HCTC AMP before you can be enrolled in the HCTC AMP program.
If your health insurance administrator does not elect to participate, you may still claim HCTC-qualified health insurance by using Form 8885, Health Coverage Tax Credit, when filing your annual federal tax return.
State Qualified Insurance
You have several options for health insurance that qualify for the HCTC, including options chosen by the State of Michigan as HCTC qualified health insurance coverage. The State of Michigan has chosen the following plans offered by Blue Cross Blue Shield of Michigan:
- HCTC Plan 1 – Community Blue PPO
- HCTC Plan 2 – Simply Blue PPO
- HCTC Plan 3 – Simply Blue PPO HSA
You can learn more about these plans by visiting www.statequalifiedplans.com or calling 844.HCTC-NOW (844.428.2669). You may also visit the State of Michigan Department of Insurance and Financial Services website at http://www.michigan.gov/difs.