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Specific Instructions

Line 1

You must elect the HCTC to take the HCTC. Check the box for the first eligible coverage month you are electing to take the HCTC. All of the statements listed must be true on the first day of that month.

Employer-sponsored health insurance plan.   You cannot take the HCTC for any month that, on the first day of the month, either (1) or (2) next 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.

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

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

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

  Check the boxes on line 1 for each month that, on the first day of the month, neither (1) nor (2) above applies and you met all of the other conditions listed on line 1.

Example 1.

On October 1, 2015, your only health insurance coverage was under an employer-sponsored health insurance plan. The plan is not one in which substantially all of the coverage is of excepted benefits described in section 9832(c). The employer paid 40% of the cost of the coverage. You paid 20% 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 60% of the cost of the coverage.

Example 2.

Assume the same facts as in Example 1 except that the employer paid only 25% of the cost of the coverage. The employer is considered to have paid 45% of the cost of the coverage (25% that was paid by the employer plus 20% that you paid through pre-tax contributions). If you were an eligible TAA recipient or PBGC pension payee, you can take the HCTC for the month of October if you met all the other conditions listed on line 1 on October 1, 2015. If you were an ATAA or RTAA recipient, you can take the HCTC for the month of October only if, on October 1, 2015, all of the following apply.

  • You were not eligible for coverage under any qualified health insurance plan (including any employer-sponsored health insurance plan of your spouse) (other than the plans listed under item 3, 4a, or 4e in the definition of Qualified Health Insurance Plan) where the employer would have paid 50% or more of the cost of the coverage.

  • The plan was a type of plan listed under item 3, 4a, or 4e in the definition of Qualified Health Insurance Plan.

  • You met all of the other conditions listed on line 1.

Line 2

If your qualified health insurance plan covers anyone other than you and your qualifying family members, see Pub. 502, Medical and Dental Expenses, before completing line 2.

Enter the total amount of insurance premiums paid for coverage for you and all qualifying family members under a qualified health insurance plan (defined earlier) for all months checked on line 1. But do not include any insurance premiums on coverage that was actually paid for with a National Emergency Grant.

Example.

You checked January on line 1. You paid $225 ($200 for basic coverage and $25 for dental benefits which are purchased separately) to your insurance company for coverage in January. 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.

Marketplace coverage.   If you enrolled in a non‐group (individual) health plan on HealthCare.gov or through a State Marketplace, you can take the HCTC as long as you do not take the PTC for the same month(s) for the same coverage. Enter on line 2 the amount you paid to your insurance provider for all eligible coverage months checked on line 1 plus the amount of the corresponding monthly advance payments of the premium tax credit (APTC) shown on Form 1095‐A, lines 21–32, column C. For more information on Marketplace coverage, see Participants in a Health Insurance Marketplace, earlier.

  
Only include on Form 8885, line 2, the APTC from Form 1095‐A, lines 21–32, column C, for those eligible coverage months you take the HCTC.

  

Example 1.

You enrolled in a non‐group (individual) health plan on HealthCare.gov for all of 2015 for yourself only. You’re eligible to take the PTC as well as the HCTC for 2015. Your share of the monthly premium was $250 per month. APTC was made for you in the amount of $200 per month, shown on Form 1095‐A, lines 21–32, column C. You elect the HCTC for your January coverage and check all 12 coverage months on line 1. You would enter $5,400 on line 2, figured as follows: $3,000 ($250 x 12 months) plus $2,400 ($200 APTC x 12 months). You must also file Form 8962 to report an excess APTC repayment of $2,400.

Example 2.

The facts are the same as Example 1 except that you elect the HCTC for your July coverage. You would complete Form 8962 to figure your PTC, if any, for January through June and to reconcile the $2,400 in APTC. You would then complete Form 8885 to figure your HCTC for July through December. You would check July through December on line 1 and enter $2,700 on line 2, figured as follows: $1,500 ($250 x 6 months) plus $1,200 ($200 APTC x 6 months).

Allocated policy amounts.   If you completed Form 8962, Part IV, to allocate policy amounts with another tax family, only include on Form 8885, line 2, the amounts allocated to you. See the Example below.

Example.

You enrolled with your spouse in a non‐group (individual) health plan on HealthCare.gov for all of 2015. On December 15th, you and your spouse divorce. You complete Form 8962, Part IV, to allocate 50% of the policy amounts on Form 1095‐A with your ex‐spouse. Your share of the monthly premium was $250 per month. This is the amount you paid to your insurance provider.

APTC was made on your behalf in the amount of $200 per month, shown on Form 1095‐A, lines 21–32, column C. You complete Form 8962, Part IV, to allocate 50% of the APTC on Form 1095‐A with your ex-spouse.

You are eligible for the HCTC for the entire year. You elect the HCTC for your January coverage and check all 12 coverage months on line 1. Because you are allocating 50% of the policy amounts with your ex‐spouse, you would include on line 2, 50% of your share of the monthly premiums or $125 per month ($250 x 0.50) and 50% of the APTC or $100 per month ($200 x 0.50). You would enter $2,700 on line 2, figured as follows: $1,500 ($125 x 12 months) plus $1,200 ($100 APTC x 12 months). You also report an excess APTC repayment of $1,200 on Form 8962.

Required Documents

You must provide verifiable proof that your health insurance plan is qualified and that you paid the qualified health insurance premiums by attaching the documents listed below to your Form 8885.

All health plans.

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

  1. An official letter reflecting your eligibility for the months claimed in 2015:

    • 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 2015 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.* 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 qualified 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 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 the qualified months.

  • A letter or other statement from your spouse’s employer that states the employer contributed less than 50% of the cost of the coverage.

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.

You are eligible to take the HCTC for March and April. You paid $500 of qualified health insurance premiums in each month for yourself and $250 for your qualifying family members directly to your qualified health plan. The amount on Form 8885, line 2, is $1,500 ($750 each for March and April). You would enter $1,087.50 (72.5% of your March and April premiums) on line 5. You must attach copies of your health insurance bills and proofs of payment for March and April for you and your qualifying family members totaling $1,500 ($750 for each month), along with any other required documents.

Amending Your 2014 Tax Return

You may be able to amend your 2014 tax return to elect the HCTC if you were an eligible TAA recipient, ATAA recipient, RTAA recipient, PBGC pension payee, or qualifying family member. Read the instructions earlier under Who Can Take This Credit and Definitions and Special Rules to see if you are eligible to take the HCTC for 2014.

Amend your 2014 tax return to take the HCTC if you are eligible.   If you have not filed a tax return for 2014, you must first file your 2014 tax return without taking the HCTC, even if you have no other filing requirement.

  To amend your 2014 tax return, you must file Form 1040X, Amended U.S. Individual Income Tax Return. See Form 1040X and its instructions for details. Complete and attach the 2013 Form 8885 for 2014 to elect the HCTC on your 2014 amended tax return. Be sure to cross out “2013” and write “2014” in large, bold numbers at the top of Form 8885. Use these instructions to help you complete the 2013 Form 8885 for 2014. If you filed Form 8962 for 2014, see Form 8962 below for special rules and instructions.

  By electing the HCTC for 2014, you may need to adjust other items on your 2014 tax return. For example, electing the HCTC can change your:
  • Medical expense deduction on Schedule A (Form 1040);*

  • Self‐employed health insurance deduction on Form 1040, line 29, or Form 1040NR, line 29;**

  • Net premium tax credit on Form 1040, line 69, Form 1040A, line 45, or Form 1040NR, line 65 (see Form 8962 below);

  • Excess advance premium tax credit repayment on Form 1040, line 46, Form 1040A, line 29, or Form 1040NR, line 44 (see Form 8962 below);

  • Alternative minimum tax on Form 1040, line 45, or Form 1040NR, line 43; and

  • Nonrefundable credits.

 
 
* If you included health insurance premiums on line 1 of your 2014 Schedule A, you must reduce this amount by any health insurance premiums you are now including on Form 8885, line 4. 
** If you included health insurance premiums on line 1 of your 2014 Self-Employed Health Insurance Deduction Worksheet in your tax return instructions, you must reduce this amount by any health insurance premiums you are now including on Form 8885, line 4.

  Make the required election in Part III of Form 1040X when explaining why you are filing Form 1040X. For example, “I am taking the HCTC. I elect the HCTC starting in January.” You must write “HCTC” in large, bold letters at the top of page 1 of Form 1040X.

  Check www.irs.gov/HCTC for information about proof of coverage and eligibility. See the Instructions for Form 1040X for information on assembling and mailing your amended tax return.

Example.

For 2012 and 2013, you were a PBGC pension payee and you qualified for the HCTC for coverage under a health plan purchased through a Voluntary Employees' Beneficiary Association (VEBA). You participated in the monthly HCTC program providing advance payments of the HCTC and paid your share of the premiums to “U.S. Treasury-HCTC” for 2012 and 2013. After the HCTC expired at the end of 2013, you paid the entire amount of premiums of $7,000 to the same health care provider. You filed your tax return for 2014 and you included the $7,000 in premiums you paid on line 1 of Schedule A, Itemized Deductions.

After reading these instructions, you determine that you are eligible to elect the HCTC for all coverage months in 2014 as a PBGC pension payee. To elect the HCTC for 2014, you must file an amended return. Complete the 2013 Form 8885 for 2014 after crossing out “2013” and writing “2014” at the top of Form 8885. Your HCTC for 2014 is $5,075 ($7,000 x 0.725). You complete Form 1040X using those instructions. On Form 1040X, line 2, you must reduce your itemized deductions because you are now taking the HCTC for the $7,000 in premiums. On line 15, Refundable credits, you check the box for 8885 and enter -0- in column A and your HCTC of $5,075 in columns B and C. At the top of Form 1040X, you write “HCTC.” In Part III of Form 1040X, you write “I am taking the HCTC. I elect the HCTC starting in January.

Form 8962.   If you filed Form 8962 for 2014, you can file an amended tax return for 2014 to take the HCTC instead of the PTC. You cannot take the PTC for those coverage months for the same coverage you elect for the HCTC. You must correct the PTC you previously claimed on Form 8962 when you amend your return. Consider whether the HCTC you elect will be more than any PTC that you could take without the election.

  When completing the 2013 Form 8885 for 2014, the cost of coverage used to figure the HCTC includes the amount you paid to the insurance provider for all the months subject to the HCTC election plus the amount of the monthly APTC shown on Form 1095-A, lines 21–32, column C, for the months subject to the HCTC election. If you completed Part 4 of Form 8962, include only the enrollment premiums and APTC allocated to you when completing the 2013 Form 8885 for 2014.

  If APTC was made for you, your spouse, or a dependent who enrolled in coverage through a Health Insurance Marketplace in 2014, continue to report all APTC on Form 8962. However, leave Form 8962, line 28, blank for all coverage you elect the HCTC. The Form 8962, line 28, repayment limit does not apply to taxpayers who elect the HCTC for coverage for any month in the tax year. Do not complete Part 5 of Form 8962 for coverage you elect the HCTC. If you amend your return for 2014, see Form 8962 and the HCTC under Participants in a Health Insurance Marketplace, earlier, for instructions on completing Form 8962 to refigure your PTC and any excess APTC repayment.

  See the examples starting below for more information on amending your tax return for 2014.

Example 1.

You enrolled in a non-group (individual) health plan on HealthCare.gov for all of 2014. Your enrollment premiums were $10,000 for the year and APTC in the amount of $5,000 was made on your behalf. You filed your return for 2014 and completed Form 8962 which reported a net PTC of $1,000 on Form 8962, line 26. After reading these instructions, you are eligible to elect the HCTC for all of 2014 as an RTAA recipient. After comparing the HCTC and the PTC, you determine your total credits would be greater by taking the HCTC for all 12 months of coverage for 2015. You elect the HCTC for your January coverage. The election applies to your coverage for all of 2014. You figure your HCTC of $7,250 as follows. Your share of the monthly premiums for all of 2014 is the $5,000 you paid plus the APTC of $5,000. You would enter $10,000 on the 2013 Form 8885 for 2014, lines 2 and 4. Your HCTC of $7,250 ($10,000 x 0.725) is entered on Form 8885, line 5.

You must refigure your 2014 PTC and repay the APTC because you are now electing the HCTC. You use the chart under Participants in a Health Insurance Marketplace, earlier, for instructions on amending your 2014 Form 8962. Your amended 2014 Form 8962 shows no PTC and shows excess APTC of $5,000. The line 28 limit does not apply because you are taking the HCTC. Your tax as reported on Form 1040X, line 6, column A, is $5,000. You would enter $5,000 in column B to reflect the excess APTC repayment and would enter $10,000 in column C. Write “APTC repayment” in the space below line 6. On Form 1040X, line 15, you check the boxes for Forms 8885 and 8962 and enter $1,000 (net PTC as reported) in column A; $6,250 ($7,250 HCTC – $1,000 net PTC) in column B; and $7,250 in column C. At the top of Form 1040X, you write “HCTC.” In Part III of Form 1040X, you write “I am taking the HCTC. I elect the HCTC starting in January.

Example 2.

You enrolled in a non-group (individual) health plan on HealthCare.gov for all of 2014. Your enrollment premiums were $9,000 for the year and APTC in the amount of $4,800 was made on your behalf. You filed your return for 2014 and completed Form 8962 which reported a net PTC of $600 on Form 8962, line 26. After reading these instructions, you are eligible to take the HCTC from July through December 2014 as an RTAA recipient. After comparing the HCTC and the PTC, you determine your total credits would be greater by taking the HCTC for July through December 2014. You elect the HCTC for your July coverage. The election applies to your coverage for the last 6 months of 2014. You figure your HCTC of $3,263 as follows. Your share of the monthly premiums for July through December is the $2,100 ($350 x 6) you paid plus the APTC of $2,400 ($400 x 6). You would enter $4,500 on the 2013 Form 8885 for 2014, lines 2 and 4. Your HCTC of $3,263 ($4,500 x 0.725) is entered on line 5.

You must refigure your PTC and any excess APTC repayment because you are now electing the HCTC. You use the chart under Participants in a Health Insurance Marketplace, earlier, for instructions on amending your 2014 Form 8962. Your refigured total PTC on line 24 is $2,700 (January through June) and your advance payment of the PTC on line 25 remains the same at $4,800. Even though you are taking the PTC for January through June, you must enter all the APTC for 2014 on your amended Form 8962. You no longer have a net PTC on line 26 but have excess APTC on line 27 of $2,100. You leave line 28 blank and enter $2,100 on line 29. Your tax as reported on Form 1040X, line 6, column A, is $1,000. You would enter $2,100 in column B to reflect the excess APTC repayment and would enter $3,100 in column C. Write “APTC repayment” in the space below line 6. On Form 1040X, line 15, you check the boxes for Forms 8885 and 8962 and enter $600 (net PTC as reported) in column A; $2,663 ($3,263 HCTC – $600 net PTC) in column B; and $3,263 in column C. At the top of Form 1040X, you write “HCTC.” In Part III of Form 1040X, you write “I am taking the HCTC. I elect the HCTC starting in July.


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