Form 1099-H: Health Coverage Tax Credit (HCTC) Advance Payments 2015

What the Form Is For

Form 1099-H is an informational tax document sent to people who received advance monthly payments of the Health Coverage Tax Credit (HCTC) during 2015. Think of it as a receipt that shows how much the government paid directly to your health insurance company on your behalf throughout the year.

The HCTC program was a federal benefit that covered 72.5% of qualified health insurance premiums for eligible individuals. Instead of waiting until tax time to claim this credit, eligible people could opt to have the government pay their portion directly to their insurer each month. Form 1099-H reports those monthly advance payments.

If you received this form, it means you were enrolled in the HCTC advance payment program, and the Department of the Treasury sent money directly to your health insurance provider. You'll need this form when preparing your 2015 tax return, as it documents the financial assistance you received and ensures you don't accidentally claim the same benefit twice.

The form shows the total amount paid on your behalf (Box 1), the number of months you received payments (Box 2), and a monthly breakdown (Boxes 3–14). Your health insurance provider—the company that received these payments—is required to send you this form by January 31, 2016.

When You’d Use It (Late Filing or Amended Returns)

You'll use Form 1099-H primarily when filing your original 2015 tax return by April 18, 2016 (the normal deadline was April 15, but that fell on a holiday). The information from this form helps you properly report the health coverage assistance you received.

However, situations arise where you might need to address Form 1099-H after the normal filing deadline. If you discover you were eligible for the HCTC but didn't initially claim it, or if you received advance payments but forgot to report them, you may need to file an amended return using Form 1040X. According to IRS guidance, you generally have three years from the date you filed your original return to amend and claim the HCTC for 2015.

For 2015 specifically, the HCTC program had been expired since 2013 but was reinstated retroactively by the Trade Preferences Extension Act of 2015 (enacted June 29, 2015). This created unique circumstances where taxpayers could file original returns and then amend them to claim benefits they didn't initially know were available.

If you're amending your 2015 return to claim the HCTC, you'll need to complete Form 8885 (Health Coverage Tax Credit) and attach it to Form 1040X. Be sure to write “HCTC” in large, bold letters at the top of your Form 1040X and explain in Part III why you're amending:
“I am taking the HCTC. I elect the HCTC starting in [month].”

Key Rules for 2015

The 2015 tax year had several special rules for Form 1099-H and the HCTC program that differ from other years:

Eligibility Requirements

To receive HCTC advance payments reported on Form 1099-H, you must have been in one of these categories:

1. An eligible Trade Adjustment Assistance (TAA), Alternative TAA, or Reemployment TAA recipient who lost a job due to foreign trade.
2. A Pension Benefit Guaranty Corporation (PBGC) pension recipient aged 55–64 who wasn't enrolled in Medicare.
3. A qualifying family member (spouse or dependent) of someone in these categories.

Election Requirement

Starting in 2014, the IRS required taxpayers to make an election to claim the HCTC. This election was irrevocable for the tax year and applied to all subsequent eligible months. If you received advance payments, you made this election when enrolling in the program.

Marketplace Insurance Temporary Inclusion

For 2014 and 2015 only, qualified health plans purchased through the Health Insurance Marketplace (Healthcare.gov or state exchanges) qualified for the HCTC. This was temporary—after 2015, Marketplace plans no longer qualified.

Interaction with Premium Tax Credit (PTC)

If you had Marketplace insurance in 2015, you could be eligible for both the Premium Tax Credit (PTC) and the HCTC, but not for the same coverage in the same month. Once you elected HCTC for a month, you couldn't claim PTC for that coverage for the rest of the year.

Additionally, if you elected HCTC for any month and received advance payments of the PTC (APTC), you had to repay all excess APTC—the usual repayment caps didn’t apply.

Credit Percentage

The HCTC covered 72.5% of qualified health insurance premiums.
Example: If your monthly premium was $1,000, the government paid $725, and you paid $275.

Qualified Health Plans

Acceptable plans included:

• COBRA continuation coverage
• Spousal employer coverage (where the employer paid <50% of premiums)
• Individual/non-group plans
• State-qualified health plans
• Certain VEBA plans
• (Temporarily) Marketplace plans

Not qualified: Medicare, Medicaid, TRICARE, and Federal Employee Health Benefits.

Step-by-Step Guide (High Level)

Step 1: Receive and Review Your Form 1099-H

Your health insurance provider should have sent you Form 1099-H by January 31, 2016. Verify that Box 1 (total advance payments) and Box 2 (number of months) match your records. Check Boxes 3–14 for the month-by-month breakdown.

Step 2: Gather Related Documents

Collect all your health insurance bills, payment receipts, and records showing premiums you paid directly (if any).
If you had Marketplace insurance, you'll also need Form 1095-A showing your monthly premiums and any advance Premium Tax Credits.

Step 3: Determine Your Total HCTC

Even though you received advance payments, you still need to complete Form 8885 to calculate your total HCTC for the year. On line 2, enter the total premiums for the months you're claiming (including the amounts the government paid through advance payments shown on Form 1099-H).
The form calculates 72.5% of these premiums as your total credit.

Step 4: Reconcile Advance Payments

Compare the total credit calculated on Form 8885 to the advance payments shown on your Form 1099-H.

• If you received more in advance payments than your actual credit → you’ll need to repay the difference.
• If you received less → you can claim the additional amount as a refund.

Step 5: Handle Marketplace Insurance Coordination (if applicable)

If you had Marketplace insurance and received both HCTC advance payments and advance Premium Tax Credits, file Form 8962 to reconcile the PTC. Report all APTC received, but leave line 28 (repayment limitation) blank because that cap doesn’t apply when you elected HCTC.

Step 6: Complete Your Tax Return

Attach Form 8885 (and Form 8962 if applicable) to your Form 1040, 1040A, or 1040NR.
The HCTC is a refundable credit, meaning if it exceeds your tax liability, you'll receive the difference as a refund.
However, any required repayments will increase your tax liability.

Step 7: Keep Records

Retain Form 1099-H, all supporting documentation, and copies of your completed tax forms for at least three years in case the IRS has questions.

Common Mistakes and How to Avoid Them

Mistake #1: Throwing Away Form 1099-H

The Fix: Always include the information from Form 1099-H when preparing your tax return. You need it to reconcile the advance payments you received.

Mistake #2: Double-Counting the Credit

The Fix: Report the total premiums (including amounts paid by advance payments) and then reconcile what you already received.

Mistake #3: Missing the Marketplace Insurance Trap

The Fix: Track which credit you’re claiming for which months. Once you elect HCTC for a month, you cannot claim PTC for that coverage for the rest of the year.

Mistake #4: Forgetting About Repayment Caps

The Fix: Before electing HCTC, calculate whether the 72.5% credit provides more benefit than the PTC, since repayment caps don’t apply.

Mistake #5: Incomplete Documentation

The Fix: Assemble all required documentation (bills, proof of payment, eligibility notices) before filing. Attach PDFs if e-filing or mail with Form 8453.

Mistake #6: Wrong Eligibility Months

The Fix: Verify monthly eligibility using TAA/PBGC documentation. You must be eligible on the first day of each month claimed.

Mistake #7: Including Non-Qualified Premiums

The Fix: Only include premiums for qualified health plans where you (or your spouse) paid more than 50% of the cost with after-tax dollars.

What Happens After You File

Processing Timeline

IRS typically processes returns:

• 21 days (e-filed)
• 6–8 weeks (paper returns)
  However, HCTC returns can take 8–12 weeks due to extra verification.

Refunds or Additional Payments

• If your calculated HCTC exceeds advance payments → refund.
• If advance payments exceeded your credit → you owe the difference.

IRS Verification

The IRS matches Form 1099-H data from providers against your return. Discrepancies trigger automated notices.

Notice CP12/CP22

These notices explain adjustments to your refund or tax owed. Respond within 30 days if you disagree.

Future HCTC Enrollment

Claiming HCTC for 2015 doesn’t automatically enroll you for later years. The advance payment program resumed in July 2016, requiring re-enrollment.

State Tax Implications

Form 1099-H is federal, but HCTC may impact your state return. Check your state’s tax rules for differences.

Audit Risk

HCTC claims are complex and audited more frequently. Keep documentation for at least three years (six is safer).

FAQs

Q1: I received Form 1099-H showing advance payments, but I also paid some premiums myself. Do I report both?

Yes. On Form 8885, line 2, enter the total premiums for all eligible months—both amounts paid through advance payments (shown on Form 1099-H) and amounts you paid directly.

Q2: Can I get both the Premium Tax Credit and the Health Coverage Tax Credit?

Yes, but not for the same coverage in the same month. You may alternate between credits for different months or policies as allowed.

Q3: My Form 1099-H shows payments for months when I wasn't actually eligible. What should I do?

Contact your health insurance provider and the HCTC Customer Contact Center immediately. Only claim the HCTC for genuinely eligible months.

Q4: I lost my Form 1099-H. How do I get a replacement?

Contact your insurance provider for a duplicate or call the HCTC Customer Contact Center (1-866-628-4282). Do not file without accurate information.

Q5: Do advance HCTC payments count as income?

No. The payments are not taxable income, but if you received more than your calculated credit, you’ll repay the excess.

Q6: I had Marketplace insurance with APTC and received HCTC advance payments. The repayment is huge! Is this correct?

Yes. When you elect HCTC, repayment caps for APTC don’t apply—you must repay all excess APTC.

Q7: I'm filing an amended return for 2015 to claim HCTC I didn't know about. What's the deadline?

You generally have three years from when you filed your original return. For example, if filed April 15, 2016 → amend by April 17, 2019.

Note: The HCTC program is complex and changed significantly in 2015. Always consult a tax professional or visit www.irs.gov/hctc for official guidance.

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