Form 1099-H: Health Coverage Tax Credit (HCTC) Advance Payments 2018

What the form is for

Form 1099-H reports advance monthly HCTC payments the government sent directly to your insurer during 2018. The HCTC helps certain workers affected by trade (TAA/ATAA/RTAA) and certain PBGC payees afford coverage by paying 72.5% of qualified premiums; you pay the remaining 27.5%. Your plan (or the HCTC Program) mails the form—usually by early February—showing your total advance payments (Box 1), number of months (Box 2), and a month-by-month breakdown (Boxes 3–14).
Source: IRS Instructions for Forms 1099-H and 8885 (2018).

When you’ll use this form (late/amended)

• Original filing (2018 return): If you had advance monthly HCTC, you must file Form 8885 to elect the HCTC and reconcile those advances—even if you don’t claim any extra credit.
• Late filing: File as soon as possible; the election (via Form 8885) must be made no later than your return’s due date including extensions. If you received advance payments but don’t make the election/reconciliation, the IRS may assess additional tax to claw back ineligible advances.
• Amended return: Use Form 1040-X with a corrected Form 8885 if you missed months you paid 100% out of pocket, or if your 1099-H figures changed.

Key rules for 2018

Credit percentage

• The government paid 72.5% of qualified premiums in 2018 (your out-of-pocket share is 27.5%). Box 1 on Form 1099-H is the total advance paid on your behalf.

Who qualifies
You qualify in a month if, on the first day of that month, you were:

• A TAA/ATAA/RTAA recipient, or
• A PBGC payee (generally age 55–65) receiving a PBGC pension;
  and your qualifying family members may be covered under your eligibility.

Qualified coverage (examples)

• COBRA continuation coverage you (or spouse) pay mostly yourself (employer pays <50%).
• Certain state-qualified HCTC plans.
• Non-group coverage (meeting timing rules).
• VEBA coverage from an employer bankruptcy.
• Certain spouse’s employer plans where you pay >50% of the premium.

Important: Marketplace (ACA) qualified health plans are not HCTC-qualified in 2018. You cannot claim HCTC and the Premium Tax Credit (PTC) for the same person and month. Coordination across different family members or different months in the year is allowed, but never for the same person/month.

No double benefits / disqualifiers
You can’t claim HCTC for a month if you (or a covered family member) were enrolled in Medicare (A/B/C), Medicaid, CHIP, FEHBP, TRICARE, or in employer coverage where the employer paid ≥50% of the premium, or if you were claimable as someone else’s dependent.
Also, you can’t “double-count” months that already received advance payments.

Step-by-step (high level)

Step 1 — Review your 1099-H

• Confirm Box 1 equals the sum of Boxes 3–14 and Box 2 matches the count of months with entries.

Step 2 — Gather proof

• Eligibility proof (PBGC or TAA/ATAA/RTAA documents).
• Bills showing plan name, coverage period, and monthly premium.
• Proof of payment (checks/ACH/CC statements) for any months you paid directly (not the months fully covered by advance payments).

Step 3 — Complete Form 8885

• Part I: Check each month in 2018 you were eligible on the first day and had qualified coverage.
• Part II:
  • Line 2: Enter only premiums you paid for months checked in Part I that did not receive advance payments (exclude payments to “U.S. Treasury–HCTC” and any advance-paid months).
  • Compute your yearly HCTC (72.5% of eligible, self-paid premiums).
  • Reconcile with advance payments shown on Form 1099-H.

Step 4 — Reconciliation outcomes

• If your allowed HCTC (for self-paid months) exceeds advances → net credit increases your refund/reduces tax.
• If advances include any month you weren’t actually eligible, those amounts are treated as excess advance payments and increase your additional tax (reported in the Other Taxes section of Form 1040 per 2018 instructions).

Step 5 — File & retain

• Attach Form 8885 to your 2018 return (Form 1040/1040-NR/1040-SS/1040-PR).
• Do not attach Form 1099-H; keep it with your records.

Common mistakes (and how to avoid them)

1. Skipping Form 8885 after getting 1099-H
   • Always file 8885 to elect/reconcile; otherwise, expect an IRS mismatch and potential additional tax assessment.
2. Counting ineligible coverage
   • Exclude Marketplace plans, separate dental/vision add-ons, FSAs/HRAs, and any plan where an employer paid ≥50% of premiums.
3. Claiming months you didn’t actually pay
   • You can only claim HCTC for months you paid your share of the premium by your return due date (including extensions). Keep payment proof.
4. Double-claiming with the PTC
   • Never claim HCTC and PTC for the same person/month. Coordinating across different family members or different months is ok.
5. Missing documentation
   • If you claim any self-paid months on Line 2, attach the eligibility letters, bills, and proof of payment the instructions require.

What happens after you file

• Matching & verification: IRS systems match your Form 8885 to 1099-H. Clean reconciliation → normal processing.
• If something’s off: You may get a notice requesting documents or proposing changes (respond by the stated deadline).
• Refund or balance due: A net credit increases your refund/reduces tax; excess advances are added as additional tax.
• Keep records: Retain 1099-H, 8885, bills, and proof of payment at least 3 years.

FAQs

I didn’t enroll in the advance program—can I still get the HCTC?
Yes. If you paid 100% of qualified premiums and were eligible, claim the full 72.5% for those months on Form 8885 (you won’t have a 1099-H).

My 1099-H looks wrong. What now?
Contact the issuer for a corrected form. If you can’t get it before filing, consider filing an extension, or file with your best-supported figures and attach an explanation and documentation.

I lost eligibility mid-year—do I repay everything?
No. You only repay advance amounts for months you weren’t eligible. That reconciliation is handled on Form 8885 and flows to Other Taxes if applicable.

Can I cover my spouse/dependents?
Yes—qualifying family members can be included, but they also must not be enrolled in disqualifying coverage (e.g., Medicare/Medicaid/CHIP/FEHBP/TRICARE) and must meet the plan rules. (Note: Medicare premiums or Medigap policies are not HCTC-qualified.)

Marketplace overlap?
You can’t use HCTC for Marketplace plans and you can’t claim HCTC and PTC for the same person/month. Different family members or different months can be coordinated appropriately.

What I changed (briefly)

• Reconciliation placement & naming: Pointed readers to the Other Taxes section for any excess advance recapture (instead of naming a specific 2018 schedule/line that often trips people up).
• Removed “consecutive months” implication: Eligibility is month-by-month; you don’t need a continuous series to claim.
• Clarified coverage examples: Kept what’s in, but avoided suggesting Medicare/Medigap could be HCTC-qualified (they’re not; only family members’ non-Medicare coverage can qualify when the primary becomes Medicare-eligible).
• Tightened PTC/HCTC coordination: Emphasized “no same person/month” but allowed coordination across different people or months.
• Softened “income-based caps on repayment” language: HCTC reconciliation is handled as additional tax per 2018 instructions; I avoided implying PTC-style caps.
• Documentation timing: Framed the “paid by due date (including extensions)” rule without over-specific line references.

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