Form 1099-H: Health Coverage Tax Credit (HCTC) Advance Payments – 2019 Guide

What Form 1099-H Is For

Form 1099-H is an information return that reports advance payments made under the Health Coverage Tax Credit (HCTC) program during 2019. If you participated in the HCTC advance payment program, your health insurance provider received payments directly from the IRS on your behalf to help cover your health insurance premiums. This form shows how much the government paid toward your health insurance each month.

Think of it as similar to a W-2 for wages—it's a statement showing what you received, but instead of salary, it reports government payments made directly to your insurance company. You'll receive Copy B of this form to keep with your tax records, while Copy A goes to the IRS.

The HCTC was designed to help specific groups of Americans afford health insurance: people receiving Trade Adjustment Assistance (TAA) benefits due to job loss from foreign trade, Alternative TAA (ATAA) recipients, Reemployment TAA (RTAA) recipients, or people receiving pension payments from the Pension Benefit Guaranty Corporation (PBGC) after their employer's pension plan failed. In 2019, the credit covered 72.5% of qualified health insurance premiums for eligible individuals and their qualifying family members.

When You’d Use (Late/Amended Filing)

Standard Timeline

Health insurance providers or the IRS HCTC Program must furnish Copy B of Form 1099-H to recipients by January 31, 2020 for the 2019 tax year. You'll use this information when filing your 2019 tax return.

Late Filing Situations

If you didn't receive your Form 1099-H by early February 2020, you should contact the IRS HCTC Program at wi.hctc.stakehldr.en@irs.gov or call the information reporting customer service at 866-455-7438. You can also reach them at 304-263-8700 (not toll-free) or TTY/TDD at 304-579-4827 for hearing or speech disabilities.

Amended Returns

You might need to file an amended return (Form 1040-X) if you discover errors after filing, such as:

Your Form 1099-H showed incorrect payment amounts
You forgot to file Form 8885 to elect the HCTC for months you participated in the advance payment program
You received a corrected Form 1099-H (marked "CORRECTED" in the checkbox at the top)

Critical Requirement

Even if you cannot claim additional HCTC on your tax return, you must still file Form 8885 to elect the HCTC for any months you participated in the advance payment program. Failing to make this timely election will require you to report advance monthly HCTC payment amounts as additional tax owed. The election must be made no later than the due date (including extensions) of your 2019 tax return—typically April 15, 2020, or October 15, 2020, with an extension.

Key Rules or Details for 2019

Eligibility Requirements

To receive HCTC advance payments in 2019, you must have been:

An eligible TAA, ATAA, or RTAA recipient, or a PBGC pension payee
Between ages 55 and 65 (for PBGC payees) and not enrolled in Medicare
Unable to be claimed as a dependent on someone else's tax return
Enrolled in qualified health insurance coverage

Coverage Rate

The HCTC covered 72.5% of qualified health insurance premiums in 2019, meaning you paid the remaining 27.5% (typically to "US Treasury-HCTC" if using advance payments).

Qualified Health Insurance

Only certain types of coverage qualified:

Group health plans through your spouse's employment (with restrictions)
Non-group individual health insurance (but NOT Marketplace plans)
COBRA continuation coverage
State-based coverage programs
VEBA-funded health plans established through bankruptcy court

Important Exclusions

You could NOT use HCTC if you or your qualifying family members were:

Enrolled in Medicare Part A, B, or C
Enrolled in Medicaid or CHIP
Covered by Federal Employees Health Benefits (FEHBP)
Eligible for TRICARE (military health system)
Covered by employer-sponsored insurance where the employer paid 50% or more of premiums

Employer Coverage Restrictions

ATAA and RTAA recipients faced stricter rules—they couldn't claim HCTC if they were even eligible for employer coverage where the employer would pay 50% or more, or if covered by any employer plan where the employer paid any portion (unless it was COBRA, certain state coverage, or VEBA coverage).

Program Expiration

The HCTC was set to expire at the end of 2019 (though it was later extended to 2020 by legislation passed in March 2020).

Step-by-Step (High Level)

Step 1: Receive Your Form 1099-H

Your health insurance provider or the IRS HCTC Program will mail you Copy B by January 31, 2020. Review it carefully for accuracy.

Step 2: Understand Your Form 1099-H

Box 1: Total HCTC advance payments made for the entire year
Box 2: Number of months you received HCTC payments
Boxes 3-14: Monthly breakdown showing advance payments for each month (January through December)

Step 3: Gather Additional Documentation

If you paid any premiums directly (beyond the 27.5% share sent to "US Treasury-HCTC"), collect:

Health insurance bills or COBRA payment coupons
Proof of payment (canceled checks, bank statements, credit card statements)
Official eligibility letters (from Department of Labor or PBGC)
Your Form 1099-R if you're a PBGC payee

Step 4: Complete Form 8885

This is the form where you elect to take the HCTC and calculate any additional credit beyond the advance payments:

Check boxes on Line 1 for each eligible coverage month (starting with your election month)
Enter premiums you paid directly (excluding advance payments) on Line 2
Calculate your total credit on Line 4
Compare to advance payments to determine if you owe money back or get additional credit on Line 5

Step 5: Attach Required Documents

If claiming additional HCTC beyond advance payments on Form 8885, Line 5, attach proof of eligibility, insurance bills, and payment documentation.

Step 6: File With Your Tax Return

Include Form 8885 with your Form 1040, 1040-SR, 1040-NR, 1040-SS, or 1040-PR. Any additional credit flows to your tax return; any repayment amount goes on Schedule 3.

Step 7: Report on Appropriate Tax Form Lines

Follow Form 8885 instructions to report the credit or repayment on the correct line of your specific tax return form.

Common Mistakes and How to Avoid Them

Mistake #1: Failing to File Form 8885

Many taxpayers who received advance payments think they don't need to do anything. Wrong! You MUST file Form 8885 to officially elect the HCTC, even if you're not claiming additional credit. Failure to elect means you'll owe the advance payments back as additional tax.
Solution: Always file Form 8885 if you received Form 1099-H.

Mistake #2: Double-Counting Premiums

Some people include advance payment amounts from Box 1 of Form 1099-H on Line 2 of Form 8885, where you report premiums you paid directly.
Solution: Only enter premiums YOU paid out-of-pocket on Line 2. Don't include anything shown on Form 1099-H—those were already paid by the government.

Mistake #3: Claiming HCTC for Ineligible Months

You might have been eligible for some months but not others (for example, if you enrolled in Medicare mid-year or got a job with employer coverage).
Solution: Carefully review each month's eligibility before checking the box on Form 8885, Line 1. Only check boxes for months where ALL requirements were met on the first day of that month.

Mistake #4: Including Ineligible Coverage

Dental or vision insurance purchased separately doesn't qualify for HCTC, nor do flexible spending arrangements.
Solution: Separate out ineligible premium amounts. Only include comprehensive health insurance premiums on Line 2. If dental/vision is part of a comprehensive package and doesn't represent "substantially all" the coverage, the entire package may qualify.

Mistake #5: Not Understanding the Marketplace Conflict

Qualified health plans through Healthcare.gov or state Marketplaces are NOT qualified health insurance for HCTC purposes—these are separate programs.
Solution: You cannot claim HCTC and Premium Tax Credit (PTC) for the same coverage in the same month. However, you can claim HCTC for your own coverage and PTC for family members' Marketplace coverage in the same month, or use different programs in different months for the same people.

Mistake #6: Missing Documentation

The IRS requires extensive proof if you're claiming additional credit—many returns get rejected for incomplete documentation.
Solution: Attach copies (not originals) of all required documents listed in Form 8885 instructions: eligibility letters, insurance bills for each month claimed, and proof of payment with amount and payee clearly shown.

Mistake #7: Pre-Tax Contributions Confusion

Some taxpayers don't realize that if they paid their share of employer coverage with pre-tax payroll deductions, the employer is considered to have paid that portion too.
Solution: If you AND your employer together paid 50% or more through any combination of contributions, you're ineligible. Pre-tax contributions count as employer-paid.

What Happens After You File

IRS Processing

The IRS will process your Form 8885 along with your tax return. If everything is in order:

Scenario 1 – You Owe a Repayment: If you received advance payments for months you weren't actually eligible (shown on Form 8885, Line 5, as a negative number), you'll owe this amount as additional tax. This gets added to your total tax liability on Schedule 3.
Scenario 2 – You Get Additional Credit: If you paid more in premiums directly than the advance payments covered, and you were eligible, you'll receive additional HCTC as a refundable credit. This reduces your tax owed or increases your refund.
Scenario 3 – Break-Even: If advance payments exactly matched your eligible credit, there's no additional refund or payment—but you still needed to file Form 8885 to properly elect the credit.

Documentation Review

The IRS may request additional documentation if your claim triggers review flags. This is more common when:

Claimed amounts are unusually high
Documentation is missing or unclear
There are discrepancies between Form 1099-H and Form 8885

Timeframe

Typical processing takes 21 days for e-filed returns with direct deposit, or up to 6 weeks for paper returns. Returns claiming HCTC may take longer due to additional verification requirements.

Audit Considerations

HCTC claims are monitored for compliance. Keep all original documentation (insurance bills, eligibility letters, payment records) for at least three years after filing, as the IRS can audit returns within this window.

Future HCTC Enrollment

If you successfully claimed HCTC for 2019 and remained eligible, you could continue the advance payment program into 2020 (the program was extended by legislation). The IRS HCTC Program would continue making monthly advance payments until the program ended.

FAQs

Q1: I received Form 1099-H but didn't pay any premiums myself—do I still need to file anything?

Yes! You must file Form 8885 with your tax return to elect the HCTC for the months shown on your Form 1099-H. Check the appropriate boxes on Line 1 for each month you received advance payments and were eligible. Leave Line 2 blank if you paid nothing out-of-pocket beyond what went to "US Treasury-HCTC." Failing to file Form 8885 means you'll owe back all the advance payments as additional tax.

Q2: Can I claim HCTC if I also have Marketplace health insurance?

Not for the same person in the same month. Marketplace plans (qualified health plans from Healthcare.gov or state exchanges) are NOT qualified health insurance for HCTC purposes. However, you CAN use both programs differently: claim HCTC for yourself (say, on COBRA coverage) while claiming Premium Tax Credit for your spouse and kids' Marketplace coverage in the same month, or use HCTC for some months and PTC for other months. Special reporting rules apply on Form 8962 if you do this—see Form 8885 instructions.

Q3: What happens if my eligibility changed mid-year—for example, I turned 65 and enrolled in Medicare?

You can only claim HCTC for months you were eligible. Once you enroll in Medicare, you're no longer eligible for HCTC for your own coverage. However, if you have qualifying family members not on Medicare, you may continue claiming HCTC for their coverage for up to 24 months after your Medicare enrollment. Only check boxes on Form 8885, Line 1, for months before Medicare enrollment (or for your family members afterward if applicable). You may need to repay advance payments received for months after you became ineligible.

Q4: My employer offered me health insurance in November 2019, but I stayed on my COBRA plan. Can I still claim HCTC for November and December?

It depends on your TAA status and the employer contribution level. TAA and PBGC recipients cannot claim HCTC if covered by employer-sponsored insurance where the employer pays 50% or more. ATAA and RTAA recipients face stricter rules—they can't claim HCTC if they were even eligible for employer coverage where the employer would pay 50% or more. If your employer would have paid 50% or more and you're ATAA/RTAA, you're ineligible starting November, even if you didn't actually enroll. TAA/PBGC recipients would remain eligible since they stayed on COBRA.

Q5: Do I need to include my dental and vision insurance premiums when calculating my HCTC?

Generally no, if purchased separately. Dental or vision insurance bought as standalone policies doesn't count as qualified health insurance for HCTC. However, if your dental and vision benefits are part of a comprehensive health insurance package and these benefits don't represent "substantially all" of the coverage, then the entire premium (including dental/vision portions) may qualify. Your insurance bills should break out these amounts separately if they're excluded.

Q6: I paid my share of premiums through payroll deduction from my spouse's employer plan. Can I claim HCTC?

Only if the total employer contribution (including your pre-tax payroll deductions) was less than 50% of the premium cost. Any amounts you paid through pre-tax deductions count as employer-paid. So if you paid 30% pre-tax and your spouse's employer paid 25%, that's 55% employer-paid, making you ineligible. If you're ATAA or RTAA, the rules are even stricter—the employer must have paid absolutely nothing for you to be eligible (with exceptions for COBRA and certain state/VEBA coverage).

Q7: Can my spouse and kids continue getting HCTC if I die or we divorce?

Yes, under special rules. Qualifying family members can continue receiving HCTC for up to 24 months after the eligible TAA/ATAA/RTAA/PBGC individual dies or finalizes a divorce with them, or until December 31, 2019 (or later if the program was extended), whichever comes first. The surviving or divorced spouse files Form 8885 under their own name and Social Security number as a "recipient" due to the continued qualification rules. They become the primary eligible person for HCTC purposes.

For More Information

Visit IRS.gov/HCTC or contact the HCTC Program at wi.hctc.stakehldr.en@irs.gov for program-specific questions. For general Form 1099-H reporting questions, call 866-455-7438.

Note: Information based on official 2019 IRS publications. The HCTC program originally expired December 31, 2019, but was later extended through 2020 by legislation enacted in March 2020.

All information sourced from official IRS.gov publications: 2019 Form 1099-H, 2019 Instructions for Form 1099-H, and 2019 Instructions for Form 8885.

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