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The Trade Preferences Extension Act of 2015, Public Law 114-27 extended and modified the expired Health Coverage Tax Credit (HCTC) through 2019.

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. The HCTC acts as partial reimbursement for premiums paid for qualified health insurance coverage and can now be claimed for qualified coverage through 2019.

Eligibility

You may be eligible to elect the HCTC only if you are one of the following:

  • An eligible trade adjustment assistance recipient, alternative TAA recipient or reemployment TAA recipient,
  • An eligible Pension Benefit Guaranty Corporation payee, or
  • The family member of an eligible TAA, ATAA, or RTAA recipient or PBGC payee who is deceased or who finalized a divorce with you.

You are not eligible for the HCTC if you:

  • Can be claimed as a dependent on another person’s federal income tax return or
  • Are enrolled in Medicare, Medicaid, the Children’s Health Insurance Program, or the Federal Employees Health Benefits Program or are eligible to receive benefits under the U.S. military health system (TRICARE).

Qualifying Health Insurance Coverage

The HCTC program does not provide health insurance coverage. You will need to have or obtain qualified health insurance coverage. All plans that were qualified for the HCTC in 2013 qualify for the HCTC through 2019. This includes COBRA or spousal coverage if the employer, or former employer, did not pay 50 percent or more of the cost of coverage. Individual (private and non-group) health insurance that you purchase for yourself or your family from an insurance company, agent, or broker are also included.

A qualified health plan offered through the Health Insurance Marketplace is not qualified coverage for the HCTC after December 31, 2015. If you are eligible to claim the Health Coverage Tax Credit and enrolled in Marketplace coverage, see our questions and answers about qualifying coverage for more information.

State Qualified Insurance

Michigan:

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. You can contact the State of Michigan Department of Insurance and Financial Services at 517-284-8800 or 877-999-6442 (toll free). The department’s website is http://www.michigan.gov/difs.

Advance Monthly Payments Available

The benefit of the Health Coverage Tax Credit is offered on a monthly basis. If you qualify, you can choose to have 72.5 percent of your qualified health insurance premiums paid in advance directly to your health plan administrator each month on your behalf to lower your out-of-pocket payments for your monthly premiums.

If you don’t request advance monthly payments and instead pay 100 percent of your health insurance premiums, you can claim your HCTC when you file your federal income tax return. This may increase your refund or lower the amount of tax that you would otherwise owe.

Advance Monthly Payments Registration

You must complete and mail Form 13441-A, HCTC Monthly Registration and Update, with all required supporting documents to the IRS to enroll. Keep a copy of the completed HCTC Monthly Registration and Update form and all required documents for your records.

Once your registration is complete and you are enrolled in the AMP HCTC program, you must pay 27.5 percent of your health insurance premiums in advance to the HCTC program through the US Bank Lockbox system by the 10th day of  each month. The HCTC program then adds the 72.5 percent advance portion of the HCTC and sends the full payment to your health plan administrator each month.

If your issue cannot be resolved online, use the HCTC toll free line: 1-844-853-7210 to check on the status of your registration or if you need general help claiming the credit.

Claiming the Health Coverage Tax Credit

Review the special filing instructions and documentation requirements to claim the HCTC.

 

Tax Years 2016 and 2017


You will need to follow tax years 2016 and 2017 instructions to claim the HCTC for 2016 and 2017 when you file your federal income tax return in 2019. You will file Form 8885, Health Coverage Tax Credit, and attach documentation that shows that you were an eligible individual for the HCTC and that the premiums claimed for your 2016 and 2017 coverage were paid.

Taxpayers will follow a similar process using the 2016 and 2017 tax year instructions to claim the HCTC for tax years 2016 and 2017.

 

Tax Year 2015


To claim the HCTC for tax year 2015, file Form 8885, Health Coverage Tax Credit, with your 2015 income tax return. Follow the 2015 Instructions for Form 8885 to figure your HCTC.

 

Tax Year 2014


To claim the HCTC for 2014, you must first file, or have filed, an original 2014 federal income tax return without claiming the HCTC, even if you have no other filing requirement. Then file Form 1040X, Amended U.S. Individual Income Tax Return, to amend your original 2014 tax return to claim the HCTC using Form 8885, Health Coverage Tax Credit.

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 or enroll in the Advance Monthly Payment program.

Health Plan Administrators or Third Party Administrators

Review the requirements for participation in the Advance Monthly Payment program.

The Trade Preferences Extension Act of 2015

The Trade Preferences Extension Act of 2015 (Public Law 114-27), enacted June 29, 2015, extended and modified the expired Health Coverage Tax Credit. Previously, those eligible for the HCTC could claim the credit against the premiums they paid for certain health insurance coverage through 2013. 

The IRS continues to work with its partners, the Pension Benefit Guaranty Corporation, the Department of Labor, and State Workforce Agencies to ensure that all eligible taxpayers have the opportunity to receive this important credit.