www.taxprofessionals.com - TaxProfessionals.com
Posted by Taxes Made EZ Inc

Understanding the Basics of Health Coverage Tax Credit

Understanding the Basics of Health Coverage Tax Credit

The Health Coverage Tax credit is a program funded by the Federal Government to assist people classified as displaced workers by the Department of Labor, US, and people benefiting from the Pension Benefit Guaranty. The Health Coverage Tax Credit takes care of a significant part of the participants' health insurance, which helps part of the workforce that are vulnerable to maintaining optimum health care. Many times, the benefits of this program have been expanded.

Who is Eligible for the Health Coverage Tax Credit

To claim the Health Coverage Tax Credit, one has to be a qualified recipient of a trade adjustment program that is eligible, or on a current break that is approved from the training or getting unemployment insurance for the training. People aged 55 and above might also qualify. 

Family members or relatives of someone deceased who qualified for the Health Coverage Tax Credit might be eligible for the credit. In addition to the candidate's requirement, one needs to meet the general requirements like being part of a qualifying health plan, footing over half of such premiums, and the person should not be claimed as a dependent on someone else's federal tax return. 

The following are the conditions under which a taxpayer can take HCTC.

  • They do not have enrollment in any part of Medicare A, B, or C., or they had Medicare enrollment, and a family member qualified for HCTC.

  • They were not part of Medicaid, Children's Health Insurance Program (CHIP), nor were they qualified to receive from the US's military health system. 

  • They have not been imprisoned under the local, state, or federal authority.

  • The spouse's employer or employer (or a past employer) didn’t pay at least 50% of the coverage cost. 

  • No one can claim them as any dependent on the year's tax return. 

The determinant of eligibility of HCTC is centered on a monthly basis. Users will get access to eligibility information, which will help estimate the credit using the premium paid for the coverage of the health insurance. 

Taxpayers have two options:

  1. Pay all health insurance premiums and claim the credit using Form 8885 on the income tax return they file every year.

  2. They can also register with the Department of Treasury and pay the 20% of the monthly fee of the fixed health insurance, and Uncle Sam will pay what is left to the insurance firm.

Using Form 8885

Form 8885 Part 1: specifies the particular month of the tax year one claimed the HCTC

Form 8885 Part II: Specifies the entire amount paid to the qualified provider of the health insurance. There will not be information on premiums directly paid to the Health Coverage Tax Credit program, advancement or reimbursement that you got, or the premiums you paid via a grant from the national emergency. 

Taxpayers need to send their tax forms with supporting documents for all amounts claimed on the return, or the claim might be canceled.

Registering with Uncle Sam

One needs to complete and send form 13441-A via mail alongside every vital document to Uncle Sam for enrolment. As long as Uncle Sam accepts the application, one can get advance payment for the program. You do not have to include this payment in form 8885 since the HCTC made the payments.



Taxes Made EZ Inc
Contact Member