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What you should know about claiming the Health Coverage Tax Credit

IRS

The Health Coverage Tax Credit is a tax credit that pays 72.5 percent of qualified health insurance premiums for eligible individuals and families. You are required to attach certain documents with your income tax return to verify you were eligible to claim the credit, that your 2015 health insurance plan was qualified, and that the premiums claimed for your 2015 coverage were paid for the IRS to process your claim for the HCTC. If you do not attach the required documentation, processing delays may occur.

Here’s what you should know about the HCTC:

  1. Who Can Claim the HCTC. You may only claim the credit if you are:
  • An eligible trade adjustment assistance (TAA) recipient, alternative (ATAA) recipient or reemployment (RTAA) recipient.
  • An eligible Pension Benefit Guaranty Corporation (PBGC) pension payee.
  • The family member of a TAA, ATAA, or RTAA recipient or PBGC pension payee who is deceased, finalized a divorce with you, or started receiving Medicare.  NOTE:  A family member is only eligible for two years after the date that created the eligibility.

If someone else can claim you as a dependent on their federal income tax return, you are not eligible for the HCTC.

  1. What Health Insurance Plans Qualify for the HCTC. Not all plans qualify. Here are some things to remember:
  • All plans that previously qualified for the HCTC qualify for the HCTC through 2019.
  • This includes individual – private and non-group – health insurance that you purchase for yourself or your family from an insurance company, agent or broker.
  • Review the Instructions for Form 8885 for information about qualified health insurance plans that are eligible.
  • For 2015, qualified coverage includes qualified health plans offered through a federal or state-based Health Insurance Marketplace.

How to Claim the HCTC. If you’ve met the requirements, here’s how to claim the credit on your 2015 tax return:

  • File Form 8885, Health Coverage Tax Credit, with your 2015 income tax return and elect HCTC when you file.
  • Attach an official letter reflecting your eligibility for the months claimed in 2015 following the special instructionsposted on IRS.gov.
  • Attach documentation about your HCTC eligibility, showing that your 2015 health plan was qualified and that the premiums were paid.
  • Follow special instructions, if you or anyone claimed on your federal income tax return enrolled in 2015 Marketplace coverage and received the benefit of advance payments of the premium tax credit in 2015. You must reconcile the advance payments on Form 8962, Premium Tax Credit.

See the Questions and Answers and Instructions for Form 8885 for more information.

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