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Specific Instructions

Line 1

You must elect the HCTC to receive the benefit of the HCTC. Check the box for the first eligible coverage month you are electing to take the HCTC. All of the statements listed on the form, and as further explained in these instructions, must be true as of the first day of that month. You must also check the box for each month after the election month for which all of the statements listed on the form are true as of the first day of that month, even if you are not claiming the HCTC for those months.

Employer-sponsored health insurance coverage.   Do not check the box for any month that, as of the first day of the month, either (1) or (2) apply.
  1. You were covered under any employer-sponsored health insurance plan (including any employer-sponsored health insurance plan of your spouse) (except insurance substantially all of the coverage of which is of excepted benefits described in section 9832(c)) and the employer paid 50% or more of the cost of the coverage; or

  2. You were an eligible ATAA or RTAA recipient and either of the following applies.

    1. You were eligible for qualified health insurance coverage (including any employer-sponsored health insurance plan of your spouse) (other than the coverage listed under item 3, 4a, or 4e in the definition of Qualified Health Insurance Coverage) where the employer would have paid 50% or more of the cost of the coverage; or

    2. You were covered under any qualified health insurance coverage (including any employer-sponsored health insurance plan of your spouse) (other than the coverage listed under item 3, 4a, or 4e in the definition of Qualified Health Insurance Coverage) and the employer paid any part of the cost of the 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.

Example.

You had health insurance coverage under an employer-sponsored health insurance plan as of October 1. The employer paid 40% of the cost of the coverage. You paid 60% of the cost of the coverage through pre-tax contributions. You cannot take the HCTC for the month of October because the employer is considered to have paid 100% of the cost of the coverage.

Line 2

If your qualified health insurance coverage covers anyone other than you and your qualifying family members, see Pub. 502, Medical and Dental Expenses, before completing line 2, to determine which amounts are considered to be paid for coverage for you and your qualifying family members.

Enter the total amount of insurance premiums paid by you for coverage for you and all qualifying family members under qualified health insurance coverage for all eligible coverage months checked on line 1. But do not include any insurance premiums paid by you for eligible coverage months for which you received the benefit of the advance monthly payment program. Also, do not include any advance monthly payments your health plan administrator received from the IRS, as shown on Form 1099-H, box 1.

Example 1.

You checked January on line 1. You paid $225 ($200 for basic coverage and $25 for dental benefits which are purchased separately) directly to your health plan for coverage for your January coverage. The $25 you paid for dental benefits is ineligible for the HCTC. You would include the $200 you paid for your basic insurance on line 2.

Example 2.

You checked December on line 1. You participated in the advance monthly payment program and paid only $88 (27.5%) of your $320 December premium. You received a Form 1099-H showing an advance payment of $232 (72.5% of the $320 premium) for your December coverage. You would not include any part of the December coverage premium on line 2 because you already received the benefit of the advance monthly payment program for December. You must still file Form 8885 to elect the HCTC for December.

Line 5

If the resulting amount is zero or blank, you can’t claim the HCTC on your income tax return. However, you must still file Form 8885 to elect the HCTC for any months you participated in the advance monthly payment program.

Required Documents

If you claim any HCTC on line 5, you must provide verifiable proof for each month you are claiming the credit on line 2 that your health insurance coverage is qualified health insurance coverage for the HCTC and that you paid premiums for the qualified health insurance coverage by attaching the documents listed below to your Form 8885. No documents are required if you file Form 8885 only to elect the HCTC for months you participated in the advance monthly payment program.

All health plans.

For all health plans you must include all of the following documents.

  1. An official letter reflecting that you were an eligible individual for the months claimed on line 2 in 2016:

    • For trade certified individuals demonstrating TAA, ATAA, or RTAA 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 or a copy of your 2016 Form 1099-R from the PBGC showing you received a benefit paid by the PBGC.

  2. A copy of your health insurance bills or COBRA payment coupons for each month you are claiming the credit on line 2.* The bills must have:

    1. Your name (or name of the policy holder),

    2. The name of your health plan,

    3. Your monthly premium amount,

    4. Dates of coverage, and

    5. Your health plan identification number(s).

    *If your health plan does not provide members with an insurance bill or COBRA payment coupon, you must provide health plan enrollment documents or an official letter from your health plan that has the required information listed under items 2a through 2e earlier. If your monthly premium includes amounts that do not count towards the HCTC, such as dental or vision coverage or coverage for family members who are not eligible for the HCTC, your documentation must also specify those ineligible amounts.

  3. Proof of payment for each month you are claiming the credit on line 2 such as:**

    1. Canceled checks (copy of front and back),

    2. Bank statements,

    3. Credit card statements, or

    4. Money orders.

    **Your proof of payment must indicate the amount paid and to whom it was paid. If you do not have one of these types of proof of payment, contact your health plan for a record of your payment(s).

COBRA coverage.

You must include the information under All health plans and one of the following documents.

  1. A copy of your completed and signed COBRA Election Letter. It may also be called a COBRA Enrollment Form, Application Form, Enrollment Application for Continuing Coverage, or Election Agreement.

  2. A letter from your former employer or COBRA administrator saying you have COBRA coverage. The letter must have:

    1. The COBRA coverage start and end dates;

    2. Name of the health plan;

    3. Your home address; and

    4. Covered family members, their dates of birth, their relationship to you, and their social security numbers.

  3. A copy of “Notice of Rights to Continue Coverage.

Coverage through your spouse’s employer.

You must include the information under All health plans and the following documents.

  • Copies of paycheck stubs showing the health coverage deductions for each month you are claiming the credit on line 2.

  • A letter or other statement from your spouse’s employer that states the employer contributed less than 50% of the cost of the coverage (TAA recipients and PBGC payees) or made no contributions to the cost of coverage (ATAA and RTAA recipients).

E-filed return.

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.

Example 1.

You checked June and July on line 1. Your insurance coverage for each month cost $750 ($500 for you and $250 for your qualifying family members). You paid $750 directly to your health plan for your June coverage. You then paid $206.25 (27.5% of the $750 premium) for your July coverage as part of the advance monthly payment program. Your health plan administrator received an advance payment of $543.75 (72.5% of the $750 premium) from the IRS for your July coverage . You received a Form 1099-H showing an advance payment of $543.75 for your July coverage. You would include the $750 you paid for your June coverage on line 2. You would not include any part of the July coverage premium on line 2 because you already received the benefit of the advance monthly payment program for July. You must attach copies of your health insurance bills and proofs of payment for the June coverage for you and your qualifying family members totaling $750, along with any other required documents. You don’t need to attach documents for your July coverage.

Example 2.

You checked March and April on line 1. Your insurance coverage for each month cost $750 ($500 for you and $250 for your qualifying family members). You paid $750 directly to your health plan for each month. You would include $1,500 on line 2 for the March and April coverage. You must attach copies of your health insurance bills and proofs of payment for the March and April coverage for you and your qualifying family members totaling $1,500 ($750 for each month), along with any other required documents.


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