Health Coverage Tax Credit: Everything You Need to Know
Are you struggling to afford health insurance? If so, you may be eligible for the Health Coverage Tax Credit (HCTC). The HCTC is a tax credit designed to help individuals and families pay for qualified health insurance premiums. In this post, we’ll answer some of the most frequently asked questions about the HCTC.
What is the Health Coverage Tax Credit?
The Health Coverage Tax Credit (HCTC) is a tax credit that helps eligible individuals and families pay for qualified health insurance premiums. It was established by Congress in 2002 as part of the Trade Act. The purpose of the HCTC is to make it more affordable for certain groups of people to purchase health insurance.
Who qualifies for the HCTC?
To qualify for the HCTC, you must meet all three of these requirements:
1. You are between 55 and 65 years old.
2. You received a pension from PBGC (Pension Benefit Guaranty Corporation) because your employer went bankrupt or out of business.
3. You are not enrolled in Medicare, Medicaid or another government-sponsored healthcare program.
If you’re married, both spouses must meet these requirements in order to qualify.
How much is the tax credit?
The amount of your tax credit will depend on how much you paid in qualified health insurance premiums during the year. For most people, the credit covers 72.5% of their monthly premium costs. However, if you are receiving unemployment benefits at any time during that same year, then your coverage cost can be upped by an extra $35 per month under certain conditions which results in an increase in coverage percentage from 72.5% up-to-82%.
Can I receive retroactive credits?
Yes! If you were eligible for the HCTC but didn’t claim it on your taxes in previous years when filing taxes using Form 8885, you can still claim the credit retroactively. You can file an amended return for up to three years after the original due date of your tax return.
How do I apply for the HCTC?
To apply for the HCTC, you need to complete and submit Form 13441-A (Application for Health Coverage Tax Credit) along with supporting documentation that shows you meet all of the eligibility requirements. This form is available on the IRS website or by contacting their toll-free number at 1-844-853-7210.
When will my HCTC benefits start?
If your application is approved, your HCTC benefits will begin on either the first day of the month in which you submitted your application or the first day of a subsequent month if requested in writing. Your benefits will continue until one of these events occurs:
• You become eligible for Medicare
• You reach age 65
• The maximum amount of time allowed under HCTC expires (which varies based on individual circumstances)
Can I use my HCTC to pay for other healthcare expenses besides insurance premiums?
No. The HCTC is only intended to cover qualified health insurance premiums.
What are qualified health insurance plans?
Qualified health insurance plans are those that have been approved by Trade Adjustment Assistance Reform Act (TAARA). These include:
• State high-risk pools
• COBRA continuation coverage
• Spouse’s employer-sponsored coverage under certain conditions
It’s important to note that not all health insurance plans qualify. Make sure to check with TAARA if you’re unsure whether your plan qualifies or not.
Is there a deadline for applying for the HCTC?
Yes! Applications must be received no later than six months after either:
1) The date on which PBGC ends payments,
2) Or from when you get notice from PBGC about being eligible because it has determined that your pension plan is terminating under Title IV of ERISA.
What happens if I’m enrolled in a qualified health plan through the Marketplace?
If you’re enrolled in a qualified health plan through the Marketplace, you may be eligible to receive advance payments of the HCTC. You’ll need to complete Form 8885-A (Health Coverage Tax Credit Advance Payments) and submit it along with your tax return. The amount of your advance payments will be based on an estimate of your expected premiums for the coming year.
In conclusion:
The Health Coverage Tax Credit can provide much-needed financial assistance to those who are struggling to afford health insurance premiums. If you meet the eligibility requirements, make sure to apply using Form 13441-A and keep all documentation that shows proof of payment for qualifying healthcare plans.