Form 1099-H: Health Coverage Tax Credit (HCTC) Advance Payments – 2017 Guide
What the Form Is For
Form 1099-H is an information return that reports Health Coverage Tax Credit (HCTC) advance payments made on behalf of eligible individuals during the 2017 tax year. If you received advance payments from the federal government to help pay your health insurance premiums in 2017, your health insurance provider issued you this form.
The HCTC was a federal tax credit designed to help specific groups of individuals pay for qualified health insurance coverage. Rather than waiting until tax time to claim the credit, eligible people could enroll in the advance payment program and have the government pay 72.5% of their qualified health insurance premiums directly to their insurance provider each month. You would pay only the remaining 27.5% out-of-pocket.
Form 1099-H documents these advance payments for your tax records. The form shows the total amount paid on your behalf (Box 1), how many months you received payments (Box 2), and a month-by-month breakdown (Boxes 3–14). You don't file Form 1099-H with your tax return—instead, you use the information from this form when completing Form 8885 (Health Coverage Tax Credit), which you do file with your Form 1040.
Eligibility for HCTC Advance Payments in 2017
The program targeted workers who lost jobs due to foreign trade competition and certain retirees whose pension plans were taken over by the Pension Benefit Guaranty Corporation (PBGC). Specifically, you qualified if you were receiving Trade Adjustment Assistance (TAA), Alternative TAA (ATAA), Reemployment TAA (RTAA), or PBGC pension benefits, were age 55–65 (for PBGC payees), not enrolled in Medicare, and enrolled in qualified health insurance coverage.
When You’d Use This Form (Late/Amended Returns)
Form 1099-H is an information return issued to you—you don't complete it yourself. Your health insurance provider or the HCTC program administrator generates this form and sends it to both you and the IRS. For 2017 coverage, you should have received your Form 1099-H by January 31, 2018.
Original Returns
Even if you received advance HCTC payments and don't owe additional tax or aren't claiming additional credit, you must still file Form 8885 with your 2017 tax return by the filing deadline to make a timely election. This election confirms you were eligible for the months you received advance payments. Without this election, the IRS treats the advance payments as taxable income, and you'll owe additional tax.
Late or Amended Returns
If you failed to file Form 8885 by the original deadline (including extensions) for your 2017 return, you cannot make a late HCTC election. This means any advance payments you received become taxable, and you must report them as additional tax owed.
If you discover errors in your Form 8885 after filing—such as incorrectly reporting eligible months or miscalculating premiums—you should file an amended return (Form 1040X) along with a corrected Form 8885.
Corrected Forms
If your health insurance provider made errors on Form 1099-H (such as incorrect payment amounts or wrong months), they must issue a corrected Form 1099-H marked “CORRECTED” in the designated box. You would then use this corrected information when filing an amended return if necessary.
Key Rules for 2017
Credit Percentage
For 2017, the HCTC covered 72.5% of qualified health insurance premiums. This means if your monthly premium was $400, the government would pay $290 (72.5%) if you participated in the advance payment program, and you'd pay $110 (27.5%).
Eligible Recipients
Only specific groups qualified:
- TAA recipients (workers certified as having lost jobs due to foreign trade)
- ATAA and RTAA recipients (older workers in alternative reemployment programs)
- PBGC payees (ages 55–65 receiving pension benefits from plans taken over by PBGC)
- Qualifying family members of these individuals
Qualified Health Insurance
Not all health insurance counted. Qualified coverage included COBRA continuation coverage, state-based health insurance, certain employer-sponsored plans (where the employer paid less than 50% of premiums), and coverage through voluntary employees' beneficiary associations (VEBAs) established in bankruptcy. Marketplace plans (Affordable Care Act exchanges) were not qualified HCTC coverage.
Employer Coverage Restrictions
You couldn't claim the HCTC for any month when you were covered under employer-sponsored insurance where the employer paid 50% or more of the premium.
Medicare and Other Coverage
Once enrolled in Medicare, Medicaid, CHIP, TRICARE, or the Federal Employees Health Benefits Program, you became ineligible for the HCTC for yourself, though qualifying family members could still potentially receive the credit.
Election Requirement
You must make a formal election to claim the HCTC by filing Form 8885, even if you only received advance payments and aren't claiming additional credit.
Step-by-Step Guide (High Level)
Step 1: Receive Form 1099-H
By January 31, 2018, your health insurance provider or the HCTC program administrator should have mailed you Form 1099-H. Review it carefully to ensure the payment amounts and months are correct.
Step 2: Gather Supporting Documentation
Collect your eligibility letters, insurance bills, and proof of payments.
Step 3: Complete Form 8885, Part I
Check the box on Line 1 for your first eligible coverage month and each subsequent eligible month through December.
Step 4: Complete Form 8885, Part II
Report only premiums you paid directly. Exclude amounts already covered by advance payments.
Step 5: Handle Excess Advance Payments
Use the Excess Advance HCTC Repayment Worksheet if you received payments for ineligible months.
Step 6: Attach Required Documents
Attach your eligibility letter, insurance bills, and payment proofs if claiming additional HCTC.
Step 7: File with Your Tax Return
Attach Form 8885 to your Form 1040, 1040NR, 1040-SS, or 1040-PR.
Common Mistakes and How to Avoid Them
Mistake #1: Failing to File Form 8885
Solution: Always file Form 8885 if you received any advance payments in 2017.
Mistake #2: Including Advance Payment Amounts on Line 2
Solution: Include only premiums you personally paid out-of-pocket.
Mistake #3: Checking Ineligible Months
Solution: Only check months where you met all eligibility conditions.
Mistake #4: Missing the Election Deadline
Solution: File your 2017 return (or extension) on time with Form 8885.
Mistake #5: Forgetting Documentation
Solution: Attach copies of all required documents when claiming additional HCTC.
Mistake #6: Not Reconciling Marketplace Coverage
Solution: Follow the special instructions in Form 8885 under “Participants in a Health Insurance Marketplace.”
Mistake #7: Using Ineligible Health Insurance
Solution: Verify your plan qualifies before checking months on Line 1.
What Happens After You File
IRS Processing
The IRS matches your Form 8885 against the 1099-H filed by your insurer.
Refund or Amount Owed
A positive Line 5 increases your refund; a negative one increases tax owed.
IRS Verification
The IRS may request additional documentation if something doesn’t match.
Audit Considerations
Keep all related documents for at least three years.
Future Year Eligibility
You must re-elect and re-qualify each year.
Correcting Errors
Use Form 1040X and a corrected Form 8885 to fix mistakes.
Frequently Asked Questions (FAQs)
Q1: What if I lost my Form 1099-H?
Contact your insurance provider or the HCTC program administrator for a duplicate.
Q2: Can I claim the HCTC if I didn’t participate in advance payments?
Yes. File Form 8885 and attach documentation for all eligible months.
Q3: What happens if I enrolled in Medicare mid-year?
You lose eligibility starting the month you enrolled. Repay any advance payments received afterward.
Q4: How does the HCTC interact with Premium Tax Credits?
You can’t claim both for the same coverage in the same month.
Q5: What if my Form 1099-H shows the wrong amount?
Request a corrected form and file an amended return if necessary.
Q6: Can family members claim the HCTC after I die or divorce?
Yes, for up to 24 months, subject to eligibility limits.
Q7: Do I need to attach Form 1099-H to my tax return?
No. It’s for your records only; the IRS already receives a copy.
Sources:
This guide is based on authoritative IRS publications including:
- 2017 Instructions for Form 1099-H
- 2017 Instructions for Form 8885
- 2017 Form 1099-H
For current HCTC updates, visit IRS.gov/HCTC.
