Form 8885 (2015) – Health Coverage Tax Credit Checklist
Purpose
Form 8885 allows eligible TAA, ATAA, RTAA recipients, and PBGC pension payees to claim a refundable health coverage tax credit equal to 72.5% of qualified health insurance premiums paid in 2015. The 2015 instructions clarify interaction rules with advance premium tax credit payments through Health Insurance Marketplaces and establish that you cannot claim both credits for the same coverage in the same month.
Step-by-Step Completion Guide
Step 1: Verify Your Dependent Status
Confirm you are not claimed as a dependent on another taxpayer’s 2015 return. If you can be claimed as a dependent by someone else, you are ineligible to file Form 8885, regardless of your TAA or PBGC status.
Step 2: Confirm Your Eligibility Status
Verify you held TAA, ATAA, or RTAA recipient status, or were a PBGC pension payee on the first day of the month you elect to begin taking the credit. Alternatively, confirm you are a qualified family member of a deceased or divorced individual who held that status. For PBGC pension payees, you must be between the ages of 55 and 65 and not enrolled in Medicare.
Step 3: Select Your Eligible Coverage Months
Review each calendar month in 2015 and check the box on Part I, line 1, for the first month you elect to take the HCTC. You must then check all subsequent months through December for which you remained eligible. All seven eligibility conditions listed on line 1 must be met on the first day of each month you check. Once you make the election, it applies to all subsequent eligible coverage months for the same coverage during 2015.
Step 4: Verify Qualified Health Insurance Coverage
Confirm that for each checked month, you and your family members were covered by a qualified health insurance plan with premiums paid by you or treated as paid through an advance premium tax credit. Qualified plans include employer-sponsored COBRA continuation coverage, non-group individual health insurance, state-qualified health plans, VEBA plans, and, for 2015 only, qualified health plans purchased through a Health Insurance Marketplace.
Step 5: Check Coverage Exclusions
Verify for each checked month that you were not enrolled in Medicare Part A, B, or C unless a family member qualified for HCTC under different criteria. Confirm you were not enrolled in Medicaid, CHIP, FEHBP, or eligible for TRICARE benefits during any month you elect the credit.
Step 6: Confirm Imprisonment and Employer Contribution Rules
Verify you were not imprisoned under federal, state, or local authority during any month checked on line 1. Confirm your employer did not pay 50% or more of the cost of your health coverage. Remember that any pre-tax contributions you made toward coverage are considered employer-paid amounts.
Step 7: Calculate Total Premiums Paid
Enter on line 2 the total premiums paid directly to your health plan for qualified coverage during the months checked in Part I. If you enrolled in coverage through a Health Insurance Marketplace, include both the amount you paid to your insurance provider plus the advance premium tax credit payments shown on Form 1095-A for the months you elected HCTC. Do not include premiums actually paid with a National Emergency Grant.
Step 8: Account for Medical Savings Distributions
Enter on line 3 any Archer MSA or health savings account distributions you used to pay qualified health insurance premiums during the checked months. Subtract line 3 from line 2 and enter the result on line 4. If line 4 is zero or negative, stop here, as you cannot claim the credit.
Step 9: Calculate Your Health Coverage Tax Credit
Multiply line 4 by 72.5%, which is the statutory credit percentage for 2015. Enter the results on line 5. This amount represents your Health Coverage Tax Credit.
Step 10: Transfer Credit to Your Main Tax Return
Transfer your line 5 amount to the appropriate line on your main return. For Form 1040, enter the amount on line 73 and select checkbox C. For Form 1040NR, enter on line 69 and check box c. For Form 1040-SS, enter on line 10. For Form 1040-PR, enter on line 10.
Step 11: Gather and Attach Required Documentation
Attach all required supporting documents to Form 8885, including statements from your health plan showing premium amounts and coverage dates, proof of premium payments such as canceled checks or bank statements, documentation of APTC payments if applicable, and official letters confirming your TAA or PBGC eligibility. Failure to attach the required substantiation will result in credit disallowance.
Step 12: Attach Form 8885 to Your Return
Attach Form 8885 to your main return using Attachment Sequence No. 134. You may file the return electronically. If you e-file, you can attach required documents as PDFs if your tax software supports this option, or mail them using Form 8453 according to the IRS instructions.
Step 13: Coordinate with Premium Tax Credit
Do not claim the premium tax credit on Form 8962 for any month you elected the health coverage tax credit on Form 8885 for the same coverage. You cannot claim both credits for the same coverage in the same month. If advance premium tax credit payments were made for months you elect HCTC, you must file Form 8962 to reconcile and report the excess APTC repayment, leaving line 28 blank as the repayment limit does not apply.
Step 14: Consider Which Credit Provides Greater Benefit
Before finalizing your election, compare whether the HCTC or the premium tax credit would provide a larger benefit. The HCTC election is irrevocable for the tax year in which it is made. You cannot later change your election to claim the premium tax credit for those same months and coverage.
Step 15: Review Special Situations
If you are married and filing separately, and both spouses were eligible recipients, special rules apply for treating your spouse as a qualifying family member. If you have qualifying family members from a life event such as the death or divorce of a TAA recipient or PBGC pension payee, you may be eligible for the credit for up to 24 months from that event. If you allocated policy amounts with another tax family on Form 8962, only include your allocated share of premiums and APTC on Form 8885.
Key 2015 Updates and Requirements
The HCTC expired at the end of 2013 but was reinstated retroactively for 2014 and 2015. The 2015 instructions provide specific guidance for Health Insurance Marketplace participants, explicitly allowing you to treat advance premium tax credit payments made directly by the Marketplace to your insurer as amounts paid by you for line 2 purposes. This clarification expanded HCTC access for Marketplace enrollees.
The credit percentage remains fixed at 72.5% for 2015 with no inflation adjustment or statutory change. Beginning in 2014, the prior 30-day waiting requirement for obtaining non-group individual coverage after leaving your job was eliminated, making it easier to qualify for coverage.
The instructions impose strict documentation requirements. You must attach proof of all amounts claimed on line 2, including health insurance bills showing your name, plan name, monthly premium amount, coverage dates, and plan identification number. You must also provide proof of payment through canceled checks, bank statements, credit card statements, or money orders. Without proper substantiation, the IRS will disallow your credit.
For 2015 only, qualified health plans offered through Health Insurance Marketplaces are eligible for HCTC. However, this coverage will no longer be qualified for HCTC in tax years starting in 2016 or later. The election coordinates eligibility between HCTC and the premium tax credit, requiring careful consideration of which credit provides greater benefit.
The HCTC election must be made by checking the box on line 1 for the first eligible coverage month. Once you elect the HCTC for a month, the election applies to all subsequent eligible coverage months during 2015 for the same coverage. The election is irrevocable and does not automatically carry forward to the next tax year. For tax years beginning after June 28, 2015, you must make the election by the due date of your tax return, including extensions.
If you received APTC for coverage through a Health Insurance Marketplace and elect HCTC for those same months, you will have an excess APTC repayment. The standard repayment limit on Form 8962, line 28, does not apply when you elect HCTC for any month, potentially resulting in a larger repayment amount than would otherwise be limited.
Monthly advance payments of the HCTC program were planned to begin in July 2016, providing an alternative to claiming the credit annually on your tax return. Eligible individuals who participated in the advance payment program would receive 72.5% credit, which would be paid directly to their insurance provider each month, thereby reducing their out-of-pocket premium costs.
Need Help With Your Tax Filing?
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
We offer:
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Call now before filing: (888) 260-9441
Fast transcript pull available
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
