Form 1099-H: Health Coverage Tax Credit (HCTC) Advance Payments – 2016 Guide

What the form is for

Form 1099-H reports the advance monthly HCTC payments your plan received on your behalf during the year. Treat it like a receipt: it shows how much of your health insurance premium the government already paid to your insurer. You’ll use the amounts shown to complete Form 8885 (Health Coverage Tax Credit) when you file. IRS

Who typically receives it:

• Certain workers impacted by trade (TAA/ATAA/RTAA) and
• PBGC pension recipients ages 55–64, if enrolled in qualified health coverage.

What’s on the form:
Box 1 = total advance payments for the year; Box 2 = number of months paid; Boxes 3–14 = each month’s amount. You don’t attach 1099-H to your return, but you use it to complete Form 8885.

When you’ll use it (late / amended returns)

• Regular filing: Include the 1099-H info when completing Form 8885 for your 2016 return to elect the HCTC for the months you were eligible (including months with advance payments). IRS
• If you missed it: File Form 1040-X and Form 8885 within the general amendment window if you didn’t claim HCTC originally. (Form 8885 makes the election; the statute in Notice 2016-2 outlines the election mechanics.)
• Corrected forms: If the plan issues a corrected 1099-H, use the corrected figures; amend your return if you already filed.

Key rules for 2016 (what changed and what counts)

• Credit rate: For 2016, HCTC equals 72.5% of qualified premiums (your share is 27.5%). The law reinstating HCTC directed re-establishing the advance payment system and confirms the 72.5% rate.
• Who’s eligible: TAA/ATAA/RTAA recipients or PBGC pension payees (55–64), subject to monthly checks (e.g., you can’t be claimed as a dependent).
• Qualified coverage: Examples include COBRA, certain state-qualified plans, certain individual plans, and some VEBA coverage. Marketplace (Exchange) plans are not HCTC-qualified for months after 2015.
• Employer coverage limits: You generally can’t claim HCTC for months you’re covered (or in some cases merely eligible) for employer-sponsored coverage that is subsidized by the employer (specific thresholds differ for TAA vs. ATAA/RTAA in the HCTC rules).

Step-by-step (high level)

1. Review your 1099-H. Confirm Box 1 (total) and monthly Boxes 3–14 match your coverage months.
2. Gather proof. Keep bills/receipts for any premiums you paid out-of-pocket (these can generate additional credit on Form 8885). IRS
3. Complete Form 8885.
   • Part I: Check each month you were eligible (this is how you elect the HCTC).
   • Do not re-enter advance payments: Amounts on 1099-H were already paid; Line 2 is only for your direct premium payments not covered by advances. IRS
4. File with your return. Attach Form 8885 to your Form 1040 for 2016 (and coordinate with Form 8962 if you or a family member also had Marketplace coverage in other months—no double benefits for the same person in the same month). IRS
5. Keep records. Retain the 1099-H, 8885, and supporting docs. IRS

Common mistakes (and easy fixes)

• Double-claiming amounts from 1099-H on Form 8885 Line 2. Fix: Line 2 is for out-of-pocket premiums only; don’t re-claim advances. IRS
• Skipping Form 8885 because you received advance payments. Fix: You still file Form 8885 to elect the credit for those months. IRS
• Including ineligible coverage (e.g., Medicare, Medicaid, CHIP, FEHBP, TRICARE, or Marketplace plans for 2016). Fix: Exclude those months; HCTC and PTC can’t apply to the same person/same month.
• Employer-coverage pitfalls. For some categories (ATAA/RTAA), even eligibility for certain employer plans can block HCTC—check the HCTC rules before claiming.

What happens after you file

The IRS matches your 1099-H advance payments to your Form 8885 election and any additional credit you claim; discrepancies can trigger a notice. (Form 1099-H exists specifically to support that reconciliation.)

Quick FAQs

Do I attach 1099-H to my return?
No—keep it for your records and use it to complete Form 8885.

Can I claim HCTC for family members?
Yes, if they meet HCTC requirements and weren’t enrolled in disqualifying coverage (e.g., Medicare). Premiums for family coverage can be part of the eligible amount.

Can I claim HCTC and the Premium Tax Credit (PTC)?
Not for the same person in the same month. You can claim different credits for different months (or different family members) when applicable. IRS+1

Marketplace plan months in 2016?
Marketplace coverage does not qualify for HCTC in 2016 (post-2015 months).

Sources (key IRS materials)

• Notice 2016-2 (IRB 2016-2) — reinstatement details, 72.5% rate, non-Marketplace rule, and election mechanics.
• About/Form 1099-H — current IRS page and form language describing purpose and recipient instructions.
• Form 8885 (e.g., 2020 rev.) — shows the month-by-month election and that you only enter out-of-pocket premiums (helpful when completing historical years). IRS