Health Coverage Tax Credit

[indyscott]

A client brought in a 1099-H "Health Coverage Tax Credit (HCTC) Advance Payments" form. She's on forced retirement from US Air, and her pension involves the PBGC, and she says she's "on COBRA for life", and 'they' pay part of the monthly premium, and she pays an additional $217/month on her own.

The 1099-H shows $292.14 per month in each of 12 month's boxes. That's what 'they' pay, I think.

I've looked at the 8885 form, and the instructions, and it looks to me like the additional $217/month she pays can go on the 8885 credit form, and she can get a credit, which is 65% of what she paid.

I never heard of this before. Have any of you any knowledge or experience with this?

[Cat in OH]

I've dealt with this both personally and for a client. If the 1099-H indicates a payment every month, then you don't do anything with it. The amount the HCTC paid is actually the credit...much like Advanced Earned Income Credit. From your post (or the numbers she gave you) the HCTC payment doesn't seem to be quite 65% so you might be able to get the additional $38.71/mo on the 8885, but not 65% of the $217.

A few notes:

1) If you file the 8885, be sure you include complete documentation of how much she paid (bills and cancelled checks).

2) Whether or not you file the 8885, none of the premium can be used on Schedule A.

3) She may be on "Cobra for life" but is only eligible for the HCTC until she turns 65 and becomes eligible for Medicare (whether or not she takes it).

Hope this helps.

Cathy

[indyscott]

Thanks Cat. I think I'll leave it alone. She's 70 yrs old, and is not covered by Medicare. Also, regarding any documentation, let's just say that's not her strong suit.