The health coverage tax credit is a program in place for tax years from 2002 to 2013 and was later extended through 2019 to help eligible individuals and families by paying a portion of premiums for qualified health insurance programs.
History of the Health Coverage Tax Credit
The HCTC is a federally funded program designed to assist people certified as displaced workers by the U.S. Department of Labor and those receiving benefits through the Pension Benefit Guaranty Corporation (PBGC) over age 55. The HCTC covers a significant portion of participants' health insurance premiums, allowing vulnerable sectors of the workforce to maintain health care coverage. Benefits under the program have been adjusted and expanded several times. The credit expired on December 31, 2021.
Eligibility requirements for the HCTC
Claiming the HCTC requires that you are an eligible recipient of a qualifying trade adjustment assistance program, currently on an approved break from such training or receiving unemployment insurance in lieu of training. You may also qualify if you are 55 or older and a PBGC payee.
Qualified family members of a deceased person eligible for the HCTC may also be eligible for the credit. As well as the candidate requirements, you are required to meet general requirements such as enrollment in a qualifying health plan, paying more than 50 percent of the premiums and not being claimed as a dependent on another person's federal tax return.
Using Form 8885
Part I of form 8885 establishes which months in the tax year you claim the HCTC. In Part II you declare the total amount you paid directly to your qualified health insurance provider, omitting any premiums paid to the HCTC program directly, any advance payments or reimbursements you received or premiums paid through a national emergency grant. Supporting documents for amounts claimed for form 8885 must accompany your return, or your claim may be disallowed.
Registering with the IRS
You need to complete and mail Form 13441-A with all supporting documents to the IRS to enroll. It is possible to receive advance payments of the HCTC if your application is accepted by the IRS. Since these amounts are paid from the HCTC program, do not include these in form 8885 as part of your health insurance payment.
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