Form 8885 Health Coverage Tax Credit

Form

8885

Department of the Treasury
Internal Revenue Service

OMB No. 1545-0074

Health Coverage Tax Credit
©

2010
Attachment
Sequence No.

Attach to Form 1040, Form 1040NR, Form 1040-SS, or Form 1040-PR.

Name of recipient (if both spouses are recipients, complete a separate form for each spouse)

134

Recipient’s social security number

Before you begin: See Definitions and Special Rules that begin on page 2.

Do not complete this form if you can be claimed as a dependent on someone else’s 2010 tax return.
CAUTION

Part I
1

Complete This Part To See if You Are Eligible To Take This Credit

Check the boxes below for each month in 2010 that all of the following statements were true on the first day of that month.
● You were an eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, reemployment TAA
(RTAA) recipient, or Pension Benefit Guaranty Corporation (PBGC) pension payee; or you were a qualified family member
of an individual who fell under one of the categories listed above when he or she passed away or with whom you finalized
a divorce.
● You were covered by a qualified health insurance plan for which you paid the entire premiums, or your portion of the
premiums, directly to your health plan or to “U.S. Treasury–HCTC.”
● You were not enrolled in Medicare Part A or Medicare Part B, or you were enrolled in Medicare but your family member(s)
qualified for the HCTC.
● You were not enrolled in Medicaid or the Children’s Health Insurance Program (CHIP).
● You were not enrolled in the Federal Employees Health Benefits Program (FEHBP) or eligible to receive benefits under
the U.S. military health system (TRICARE).
● You were not imprisoned under federal, state, or local authority.
● Your employer did not pay 50% or more of the cost of coverage.
● You did not receive a 65% COBRA premium reduction from your former employer or COBRA administrator.

Part II
2

January

February

March

April

May

June

July

August

September

October

November

December

Health Coverage Tax Credit

Enter the total amount paid directly to your health plan for qualified health insurance coverage
for the months checked on line 1 (see instructions on page 3). Do not include on line 2 any
qualified health insurance premiums paid to “U.S. Treasury–HCTC” or any insurance premiums
on coverage that was actually paid for with a National Emergency Grant. Also, do not include
any advance (monthly) payments or reimbursement credits you received, as shown on Form
1099-H, box 1

CAUTION

3

2

You must attach the required documents listed on page 4 for any
amounts included on line 2. If you do not attach the required documents,
your credit will be disallowed.

Enter the total amount of any Archer MSA or health savings accounts distributions used to pay
for qualified health insurance coverage for the months checked on line 1

3

4

Subtract line 3 from line 2. If zero or less, stop; you cannot take the credit

4

5

Health Coverage Tax Credit. If you received an advance payment for any month not checked
on line 1, see the instructions for line 5 on page 4. Otherwise, multiply the amount on line 4 by
80% (.80). Enter the result here and on Form 1040, line 71 (check box d); Form 1040NR, line 66
(check box d); Form 1040-SS, line 9; or Form 1040-PR, line 9

For Paperwork Reduction Act Notice, see your tax return instructions.

Cat. No. 34641D

5
Form

8885

(2010)

Form 8885 (2010)

General Instructions
Section references are to the Internal Revenue Code unless
otherwise noted.

Purpose of Form

Page

Family Members in Certain Life Events
Family members (spouses and dependents) are eligible to receive the
HCTC for any month through December 31, 2010, from the month a
TAA, ATAA, RTAA recipient or PBGC payee died or with whom you
finalized a divorce.

Use Form 8885 to figure the amount, if any, of your health coverage
tax credit (HCTC).

Example. Your spouse was a PBGC payee and died on August
20, 2010. You are eligible to receive the HCTC for August through
December 2010.

Who Can Take This Credit

Qualified Health Insurance Plan

You can take this credit only if (a) you were an eligible trade
adjustment assistance (TAA) recipient, alternative TAA (ATAA)
recipient, reemployment TAA (RTAA) recipient, or Pension Benefit
Guaranty Corporation (PBGC) pension payee in 2010; or you were
the family member of a TAA, ATAA, or RTAA recipient or PBGC
payee who passed away or with whom you finalized a divorce in
2010, (b) you cannot be claimed as a dependent on someone else’s
2010 tax return, and (c) you met all of the other conditions listed on
line 1. If you cannot be claimed as a dependent on someone else’s
2010 tax return, complete Form 8885, Part I, to see if you are eligible
to take this credit.

Definitions and Special Rules
TAA Recipient
You were an eligible TAA recipient on the first day of the month if,
for any day in that month or the prior month, you:
● Received a trade readjustment allowance, or
● Would have been entitled to receive such an allowance except
that you had not exhausted all rights to any unemployment insurance
(except additional compensation that is funded by a state and is not
reimbursed from any federal funds) to which you were entitled (or
would be entitled if you applied).
Example. You received a trade readjustment allowance for
January 2010. You were an eligible TAA recipient on the first day of
January and February.

2

A qualified health insurance plan is any of the following.
1. Coverage under a group health plan available through the
employment of your spouse. But see the instructions for line 1 on
page 3.
2. Coverage under individual health insurance if you were covered
under individual health insurance during the entire 30-day period
ending on the date you were separated from your job that qualified
you for TAA, ATAA, RTAA, or PBGC pension benefits. Individual
health insurance does not include any insurance connected with a
group health plan or federal- or state-based health insurance
coverage.
3. Coverage under a COBRA continuation provision (as defined in
section 9832(d)(1)).
Note. As of February 2009, electing to receive the 65% COBRA
premium reduction will disqualify you from receiving the HCTC in the
same month. You must pay more than 50% of your COBRA
coverage to be eligible for the HCTC.
4. Coverage under a state-qualified health plan. State-qualified
health plans include:
a. Continuation coverage provided by the state under a state law
that requires such coverage.
b. A qualified state high risk pool (as defined in section 2744(c)(2)
of the Public Health Service Act).
c. A health insurance program offered for state employees.

ATAA Recipient

d. A state-based health insurance program that is comparable to
the health insurance program offered for state employees.

You were an eligible ATAA recipient on the first day of the month if,
for that month or the prior month, you received benefits under an
alternative trade adjustment assistance program for older workers
established by the Department of Labor.

e. An arrangement entered into by a state and (a) a group health
plan (including such a plan which is a multiemployer plan as defined
in section 3(37) of ERISA), (b) an issuer of health insurance coverage,
(c) an administrator, or (d) an employer.

Example. You received benefits under an alternative trade
adjustment assistance program for older workers for October 2010.
The program was established by the Department of Labor. You were
an eligible ATAA recipient on the first day of October and November.

f. A state arrangement with a private sector health care coverage
purchasing pool.

RTAA Recipient
You were an eligible RTAA recipient on the first day of the month if,
for that month or the prior month, you received benefits under a
reemployment trade adjustment assistance program for older
workers established by the Department of Labor.
Example. You received benefits under a reemployment trade
adjustment assistance program for older workers for October 2010.
The program was established by the Department of Labor. You were
an eligible RTAA recipient on the first day of October and November.

PBGC Pension Payee
You were an eligible PBGC pension payee on the first day of the
month, if both of the following apply.
1. You were age 55 or older on the first day of the month.
2. You received a benefit for that month that was paid by the
PBGC under title IV of the Employee Retirement Income Security Act
of 1974 (ERISA).
If you received a lump-sum payment from the PBGC after August
5, 2002, you meet item (2) above for any month that you would have
received a PBGC benefit if you had not received the lump-sum
payment.

g. A state-operated health plan that does not receive any federal
financial participation.
Exception. A qualified health insurance plan does not include any of
the following.
● Any state-based coverage listed in 4a through 4g above unless it
also meets the requirements of section 35(e)(2).
● A flexible spending or similar arrangement.
● Any insurance if substantially all of its coverage is of excepted
benefits described in section 9832(c). For example, if you purchase
dental or vision benefits separately, these benefits are not part of a
qualified health insurance plan for the HCTC. But, if you purchase
dental or vision benefits as part of a comprehensive package and
these benefits do not represent substantially all of its coverage,
these benefits may be part of a qualified health insurance plan and
the premiums paid may be eligible for the HCTC.
If you are not sure whether your health insurance plan is
a qualified health insurance plan, go to IRS.gov, enter
HCTC Additional Resources for Individuals in the search
box and link to the HCTC Program Kit found under that
heading. You can also contact the HCTC Customer Contact Center
at 1-866-628-HCTC (1-866-628-4282).

TIP

Form 8885 (2010)

Qualifying Family Member
A qualifying family member is:
● Your spouse (but see Married Persons Filing Separate Returns
below), or
● Anyone whom you can claim as a dependent (but see the exception
for Children of Divorced or Separated Parents below).
For any month that you are eligible to claim the HCTC, you can
include premiums paid for a qualifying family member for that month
if all of the following statements were true as of the first day of that
month.
● The qualifying family member was covered by a qualified health
insurance plan (defined earlier) for which you paid the premiums.
You and your qualifying family member do not have to be covered
by the same plan.
● The qualifying family member was not enrolled in Medicare Part A,
B, or C.
● The qualifying family member was not enrolled in Medicaid or the
Children’s Health Insurance Program (CHIP).
● The qualifying family member was not enrolled in the Federal
Employees Health Benefits Program (FEHBP) or eligible to receive
benefits under the U.S. military health system (TRICARE).

Page

3

1. You were covered under any employer-sponsored health
insurance plan (including any employer-sponsored health insurance
plan of your spouse) (except insurance substantially all of the
coverage of which is of excepted benefits described in section
9832(c)) and the employer paid 50% or more of the cost of the
coverage.
2. You were an ATAA or RTAA recipient and either of the following
applies.
a. You were eligible for coverage under any qualified health
insurance plan (including any employer-sponsored health insurance
plan of your spouse) (other than the plans listed under 3, 4a, or 4e in
the definition of Qualified Health Insurance Plan on page 2) where
the employer would have paid 50% or more of the cost of the
coverage.
b. You were covered under any qualified health insurance plan
(including any employer-sponsored health insurance plan of your
spouse) (other than the plans listed under 3, 4a, or 4e in the
definition of Qualified Health Insurance Plan on page 2) and the
employer paid any part of the cost of the coverage.
Any amounts contributed to the cost of coverage by you
or your spouse on a pre-tax basis are considered to have
been paid by the employer.
CAUTION

● The qualifying family member was not covered by, or eligible for
coverage under, any employer-sponsored health insurance plan (see
the instructions for line 1 on this page).

Check the boxes on line 1 for each month that, on the first day of
the month, neither (1) nor (2) above applies and you met all of the
other conditions listed on line 1.

Additionally, qualifying family members of TAA, ATAA, and RTAA
recipients or PBGC payees who enrolled in Medicare in 2010 are
eligible to receive the HCTC from the date of Medicare enrollment
through December 31, 2010. In order to receive the HCTC, the family
member must meet all of the requirements described above.

Example 1. On October 1, 2010, your only health insurance
coverage was under an employer-sponsored health insurance plan.
The plan is not one in which substantially all of the coverage is of
excepted benefits described in section 9832(c). The employer paid
40% of the cost of the coverage. You paid 20% of the cost of the
coverage through pre-tax contributions. You cannot claim the HCTC
for the month of October because the employer is considered to
have paid 60% of the cost of the coverage.

Married Persons Filing Separate Returns
Your spouse is not treated as a qualifying family member if your
filing status is married filing separately and either (1) or (2) below
applies.
1. Your spouse also was an eligible TAA recipient, ATAA recipient,
RTAA recipient, or PBGC pension payee in 2010.
2. All of the following apply:
a. You lived apart from your spouse during the last 6 months of
2010.
b. A qualifying family member (other than your spouse) lived in
your home for more than half of 2010.
c. You provided over half of the cost of keeping up your home.

Children of Divorced or Separated Parents
Even if you cannot claim your child as a dependent, he or she is
treated as your qualifying family member for the HCTC if both of the
following apply.
● You were the child’s custodial parent. This is the parent with
whom the child lived for the greater number of nights in 2010. If the
child was with each parent for an equal number of nights, the
custodial parent is the parent with the higher adjusted gross income.
● The child’s other parent can claim the child as a dependent under
the rules for children of divorced or separated parents (see the
instructions for Form 1040, line 6c, or Pub. 501, Exemptions,
Standard Deduction, and Filing Information, for details).
If both of the above apply, the child’s other parent cannot treat
the child as a qualifying family member for the HCTC.
The child must also meet all of the other conditions of a
qualifying family member defined above.
CAUTION

Specific Instructions
Line 1
Employer-sponsored health insurance plan. You cannot claim the
HCTC for any month that, on the first day of the month, either (1) or
(2) next apply.

Example 2. Assume the same facts as in Example 1 except that
the employer paid only 25% of the cost of the coverage. The
employer is considered to have paid 45% of the cost of the
coverage (25% that was paid by the employer plus 20% that you
paid through pre-tax contributions). If you were an eligible TAA
recipient or PBGC pension payee, you can claim the HCTC for the
month of October if you met all the other conditions listed on line 1
on October 1, 2010. If you were an ATAA or RTAA recipient, you can
claim the HCTC for the month of October only if, on October 1,
2010, all of the following apply.
● You were not eligible for coverage under any qualified health
insurance plan (including any employer-sponsored health insurance
plan of your spouse) (other than the plans listed under 3, 4a, or 4e in
the definition of Qualified Health Insurance Plan on page 2) where the
employer would have paid 50% or more of the cost of the coverage.
● The plan was a type of plan listed under 3, 4a, or 4e in the
definition of Qualified Health Insurance Plan on page 2.
● You met all of the other conditions listed on line 1.

Line 2

CAUTION

If your qualified health insurance plan covers anyone
other than you and your qualifying family members, see
Pub. 502, Medical and Dental Expenses (Including the
Health Coverage Tax Credit), before completing line 2.

Enter the total amount of insurance premiums paid for coverage
for you and all qualifying family members under a qualified health
insurance plan (as defined on page 2) for all months checked on line
1. But do not include any qualified health insurance premiums you
paid to “U.S. Treasury–HCTC” or any insurance premiums on
coverage that was actually paid for with a National Emergency
Grant. Also, do not include any advance (monthly) payments or
reimbursement credits you received, as shown on Form 1099-H,
box 1.
Example 1. You checked January on line 1. You paid $225 ($200
for basic coverage and $25 for dental benefits which are purchased
separately) to your insurance company for coverage in January. The
$25 you paid for dental benefits is ineligible for the HCTC. You
would include the $200 you paid for your basic insurance on line 2.

Form 8885 (2010)

Example 2. Your insurance coverage for January cost $225 ($200
for basic coverage and $25 for dental benefits ineligible for the HCTC).
You paid $65 to “U.S. Treasury–HCTC” for January. The $65 equals
$40 (your 20% share of the $200 eligible premium) plus the $25 for
dental benefits ineligible for the HCTC. You received a Form 1099-H
showing an advance payment of $160 (80% of the $200 eligible
premium) for January. You would check January on line 1 but you
would include nothing for January on line 2.

Required Documents
You must provide verifiable proof that your health insurance plan is
qualified and that you paid the qualified health insurance premiums
by attaching the documents listed below to your Form 8885.
All health plans. For all health plans you must include both of the
following documents.
1. A copy of your health insurance bills or COBRA payment
coupons.* The bills must have:
a. Your name (or name of the policy holder),
b. The name of your health plan,
c. Your monthly premium amount,
d. Dates of coverage, and
e. Your health plan identification number(s).
*If your qualified health plan does not provide members with an
insurance bill or COBRA payment coupon, you must provide health
plan enrollment documents or an official letter from your health plan
that has the required information listed under 1a through 1e earlier. If
your monthly premium includes amounts that do not count towards
the HCTC, such as dental or vision coverage or coverage for family
members who are not eligible for the HCTC, your documentation must
also specify those ineligible amounts.
2. Proof of payment such as:**
a. Canceled checks (copy of front and back),
b. Bank statements,
c. Credit card statements, or
d. Money orders.
**Your proof of payment must indicate the amount paid and to
whom it was paid. If you do not have one of these types of proof of
payment, contact your health plan for a record of your payment(s).
COBRA coverage. You must include the information under All
health plans and one of the following documents.
1. A copy of your completed and signed COBRA Election Letter. It
may also be called a COBRA Enrollment Form, Application Form,
Enrollment Application for Continuing Coverage, or Election
Agreement.
2. A letter from your former employer or COBRA administrator
saying you have COBRA coverage. The letter must have:
a. The COBRA coverage start and end dates,
b. Name of the health plan,
c. Your home address, and
d. Covered family members, their dates of birth, their relationship
to you, and their social security numbers.
3. A copy of “Notice of Rights to Continue Coverage.”

Page

4

Non-group (individual) health plans. You must include the
information under All health plans and both of the following
documents.
● A letter or other document from your former employer or your
unemployment office that shows the date you left your job.
● A document from your health plan that shows your first date of
coverage. Your first day of coverage in a non-group (individual)
health plan must have been at least 30 days before you left your
job.
Coverage through your spouse’s employer. You must include
the information under All health plans and the following documents.
● Copies of paycheck stubs showing the health coverage
deductions for the qualified months.
● A letter or other statement from your spouse’s employer that
states the employer contributed less than 50% of the cost of the
coverage.
E-filed return. If you e-file, you must attach a copy of the
required documents to Form 8453, U.S. Individual Income Tax
Transmittal for an IRS e-file Return.
Example 1. You are eligible to claim the HCTC for October and
November. You paid $500 of qualified health insurance premiums in
each month for yourself and $250 for your qualifying family members.
The amount on Form 8885, line 2, is $1,500 ($750 for October and
$750 for November). You did not receive any HCTC advance
payments during 2010. You must attach copies of your health
insurance bills and proof of payment for you and your qualifying family
members totaling $1,500, along with any other required documents.
The bills and proof of payment should be for October and November.
Example 2. The facts are the same as in Example 1 except that,
instead of paying the $750 premium for November, you paid $150
(20% of the $750 November premium) to “U.S. Treasury–HCTC” and
received an advance payment of $600 (80% of the $750 November
insurance premium). Form 1099-H shows the total advance payment
of $600. You would include $750 on line 2, for the October payment.
You would not include any part of the November insurance premium.
You must attach a copy of your health insurance bill and proof of
payment totaling $750 for October, along with any other required
documents.

Line 5
If you received an advance payment for any month not checked on
line 1, you must reduce the amount on line 5 by the total of those
advanced payments. If the result is less than zero, show the amount
on line 5 as a negative number by enclosing it in parentheses. This
amount is treated as an additional tax and must be treated as a
positive amount and included in the total you enter on Form 1040,
line 60; Form 1040NR, line 59; Form 1040-SS, line 5; or Form
1040-PR, line 5. On the dotted line next to that line enter “HCTC”
and the amount of this additional tax.