Questions and Answers about Claiming the Health Coverage Tax Credit in 2015
Q1. How do I know if I am eligible to claim the HCTC for 2015? How will the IRS know?
A1. If you were an eligible trade adjustment assistance recipient, alternative TAA recipient, reemployment TAA recipient, Pension Benefit Guaranty Corporation (PBGC) pension payee, or a qualifying family member during 2015, you may be able to claim the HCTC for qualifying health insurance coverage. The PBGC, the Department of Labor or a State Workforce Agency should have notified you by letter. Remember you, your spouse and eligible family members must have been enrolled in a qualified health insurance plan for any months in 2015 that you are you claiming the HCTC.
A qualified family member must be the spouse, or former spouse in the event of a divorce, or a dependent of the PBGC payee or TAA recipient and be enrolled in a qualified health insurance plan, including COBRA.
If the TAA, ATAA, or RTAA recipient or PBGC pension payee is deceased, enrolled in Medicare, or finalized a divorce with you, the qualified family member is eligible to receive the HCTC for up to 24 months from the month of the event.
Q2. What health insurance qualifies for the HCTC?
A2. All qualified health plans offered through a Health Insurance Marketplace and all plans that were previously qualified for the HCTC qualify for the HCTC for 2015. In addition, you no longer have to be enrolled in non-group (individual) coverage for 30 days before you became eligible for the HCTC. Review the instructions for Form 8885, Health Coverage Tax Credit, for information about qualified health insurance plans that are eligible for the HCTC in 2015.
Q3. Are there special instructions for claiming the HCTC when I file my 2015 tax return?
A3. Yes. Check IRS.gov/HCTC for important information about claiming the HCTC when you file your 2015 income tax return. You must:
- Make the required election to take the HCTC on Form 8885, Health Coverage Tax Credit;
- File Form 8885, Health Coverage Tax Credit, with your income tax return;
- Attach a copy of the official letter of eligibility from the PBGC, Department of Labor, or your state workforce agency or employment office; and
- Attach proof that your 2015 health insurance plan was qualified and that the premiums claimed for your 2015 coverage were paid.
Q4. What documents should I include and attach to my tax return?
A4. You must attach several different documents to your income tax return for the IRS to process your claim for the HCTC. If you do not attach the required documentation, processing delays may occur if the IRS has to correspond with you for additional information.
Attachment #1: You must attach documents that reflect your eligibility for the HCTC 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
Attachment #2: You must also attach documents to verify that your 2015 health insurance plan was qualified and the premiums claimed for your 2015 coverage were paid. See the instructions to Form 8885 for a detailed list of required documents that you must attach.
Q5. I enrolled in a qualified health plan in 2015 through a Health Insurance Marketplace. What else do I need to do?
A5. You can claim the HCTC for all qualified health plans offered through a Health Insurance Marketplace in 2015. However, you cannot claim both the HCTC and the premium tax credit (PTC) for the same coverage for the same coverage months checked on line 1 of Form 8885. You can only claim PTC for coverage for which you do not elect the HCTC.
Q6. How do I report the 2015 premium tax credit or any advance payments on my tax return?
A6. You must:
- File Form 8962 to reconcile advance payments of the premium tax credit if APTC was made for you, your spouse, or a dependent during 2015. You may have an excess APTC repayment if you elect the HCTC.
- Leave Form 8962, line 28, blank, if you elect the HCTC for any month for the same coverage.
- Not elect the alternative calculation for year of marriage on Form 8962, Part V, if you elect the HCTC for the same coverage.
- Claim PTC on Form 8962 for coverage not subject to the HCTC election.
Do not file Form 8962 if no APTC was made for you, your spouse, or a dependent and you are not claiming the PTC for any coverage month during tax year 2015.
Q7. Can I file my return electronically? What about the supporting documents? Are there any special instructions?
A7. If you e-file, you can attach a copy of any required documents to an electronically filed return as a PDF if your tax software supports it, or you must attach those documents to Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return, and mail them to the IRS according to the instructions for that form.
Q8. Where can I find more information about the HCTC and reconciling advance payments of the premium tax credit?
See IRS Notice 2016-02 for more information, including questions and answers about specific situations.