Form 8885 Health Coverage Tax Credit

Form

8885

Department of the Treasury
Internal Revenue Service

OMB No. 1545-0074

Health Coverage Tax Credit
▶

2011

Attachment
Sequence No. 134
Recipient’s social security number

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)

Note. See the instructions for line 7 if you received advance (monthly) payments and you are only filing Form 8885 to claim the
additional credit as reported on your Form 1099-H. You will need to include this amount on line 7.

Before you begin: See Definitions and Special Rules in the instructions.

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Do not complete this form if you can be claimed as a dependent on someone else’s 2011 tax return.

Part I

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

CAUTION

1

Check the boxes below for each month in 2011 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 and/or your family member(s) 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, B, or C, 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.
January
July

Part II
2

February
August

March
September

April
October

4
5
6
7

June
December

Health Coverage Tax Credit

Enter in each column the amount paid directly to your health plan for
qualified health insurance coverage for the months checked on line 1 that
are included under the heading for the column (see instructions). 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 . . . . . . . . . . . . . . . . . .
You must attach the required documents listed in the instructions
for any amounts included on line 2. If you do not attach the
CAUTION required documents, your credit will be disallowed.

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3

May
November

Enter in each column 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 that are included under the heading for the column .
Subtract line 3 from line 2. If zero or less, enter -0-. If you entered -0- in both
columns, stop; you cannot take the credit (but see Note above) . . . .
Applicable percentage . . . . . . . . . . . . . . . . .
Multiply the amount on line 4 in each column by the applicable percentage
shown on line 5 for that column . . . . . . . . . . . . . .

Column A
January and February

2

3
4
5

.80

.725

6

Health Coverage Tax Credit. If you received an advance (monthly) payment in any month in
2011, add the amount reported in the box to the left of box 8 of your Form 1099-H to the total of
any amount(s) on line 6 and enter it here. If you received an advance (monthly) payment in any
month not checked on line 1, see the instructions for line 7 for more details. Otherwise, add the
amounts on line 6. Enter the result here and on Form 1040, line 71 (check box d); Form 1040NR,
line 67 (check box d); Form 1040-SS, line 9; or Form 1040-PR, line 9 . . . . . . . . . .

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

Column B
March–December

Cat. No. 34641D

7
Form 8885 (2011)

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Form 8885 (2011)

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

What's New
Decrease in the credit. For January and February 2011, the credit was
80% for amounts paid for qualified health insurance premiums. For
March–December 2011 coverage, the tax credit decreased to 72.5%.
Additional 7.5% retroactive credit. Participants that received 65%
advance monthly payments for March–December 2011 are eligible to
receive an additional 7.5% retroactive credit. See the instructions for
line 7 for more information.
Future developments. The IRS has created a page on IRS.gov for
information about Form 8885 and its instructions at
www.irs.gov/form8885. Information about future developments affecting
Form 8885 (such as legislation enacted after we release it) will be
posted on that page.

Purpose of Form
Use Form 8885 to figure the amount, if any, of your health coverage tax
credit (HCTC) or to take any additional 7.5% retroactive credit.
Self-Employment Health Insurance Deduction Worksheet. If you are
completing the Self-Employed Health Insurance Deduction Worksheet in
your tax return instructions and, during 2011, you were an eligible trade
adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient,
reemployment TAA (RTAA) recipient, or Pension Benefit Guaranty
Corporation (PBGC) pension recipient, you must complete Form 8885
before completing that worksheet. When figuring the amount to enter on
line 1 of the worksheet do not include:
• Any amounts you included on Form 8885, line 4,
• Any qualified health insurance premiums you paid to
“U.S. Treasury-HCTC,”
• Any health coverage tax credit advance payments shown in box 1 of
Form 1099-H, or
• Any additional retroactive credit amount in the box to the left of box 8
on Form 1099-H.

Who Can Take This Credit
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 2011; 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, (b) you cannot be claimed as
a dependent on someone else’s 2011 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 2011 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
2011. You were an eligible TAA recipient on the first day of January and
February.

ATAA Recipient
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.
Example. You received benefits under an alternative trade adjustment
assistance program for older workers for October 2011. The program
was established by the Department of Labor. You were an eligible ATAA
recipient on the first day of October and November.

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 January 2011. The
program was established by the Department of Labor. You were an
eligible RTAA recipient on the first day of January and February.

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.

Family Members in Certain Life Events
Qualifying family members (spouses and dependents) are considered
recipients and are eligible to receive the HCTC in the event that the TAA,
ATAA, or RTAA recipient or PBGC payee dies or with whom they
finalized a divorce. Qualified family members can receive the tax credit
for up to 24 months from the event, or until January 1, 2014. Eligible
taxpayers who plan to claim this credit under these life events, who
were not enrolled in the monthly HCTC program in January or February
2011, must call the HCTC Program prior to filing Form 8885 to ensure it
is processed correctly. See the TIP later for the phone number.
Example. Your spouse was a PBGC payee and died on August 20,
2011. You are eligible to receive the HCTC for August 2011 through July
2013.

Qualified Health Insurance Plan
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.
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.
d. A state-based health insurance program that is comparable to the
health insurance program offered for state employees.
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.
f. A state arrangement with a private sector health care coverage
purchasing pool.
g. A state-operated health plan that does not receive any federal
financial participation.
5. A health plan purchased through a Voluntary Employees'
Beneficiary Association (VEBA) that was established through the
bankruptcy of your former employer and was offered to you in lieu of
COBRA coverage and retiree benefits. For more information, see the TIP
at the end of this section.
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).

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Form 8885 (2011)

• 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
TIP Resources in the search box and link to HCTC: Resources
for Individuals found under that heading. You can also
contact the HCTC Customer Contact Center at 1-866-628-HCTC
(1-866-628-4282) or 1-866-626-4282 (TTY).

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).
• 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).
If you are a TAA, ATAA, or RTAA recipient or PBGC payee who
enrolled in Medicare, you can receive the HCTC for the health plan
premiums of your qualified family member(s) for up to 24 months from
the month you enrolled in Medicare, or until January 1, 2014. In order to
receive the HCTC, your qualified family members must meet all of the
requirements described above. Eligible taxpayers who plan to claim this
credit due to Medicare enrollment, who were not enrolled in the monthly
HCTC program in January or February 2011, must call the HCTC
Program prior to filing Form 8885 to ensure it is processed correctly.
See the TIP above for the phone number.

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 2011.
2. All of the following apply:
a. You lived apart from your spouse during the last 6 months of 2011.
b. A qualifying family member (other than your spouse) lived in your
home for more than half of 2011.
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 2011. 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.

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The child must also meet all of the other conditions of a
qualifying family member defined earlier.

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.
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) 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) and the employer paid any part of the
cost of the coverage.

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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

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.
Example 1. On October 1, 2011, 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.
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, 2011. If you were an
ATAA or RTAA recipient, you can claim the HCTC for the month of
October only if, on October 1, 2011, 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) 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.
• You met all of the other conditions listed on line 1.

Line 2

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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.

Form 8885 (2011)

Enter the total amount of insurance premiums paid for coverage for
you and all qualifying family members under a qualified health insurance
plan (defined earlier) 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, column A.
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.

Line 7
Additional retroactive credit amount. If you received 65% advance
(monthly) payments in any month from March through December, you
are entitled to an additional 7.5% (.075) retroactive credit. The total
amount of your additional retroactive credit for those months can be
found in the box to the left of box 8 on your 2011 Form 1099-H. For
more important information, refer to the Instructions for recipients on
Form 1099-H.
If you are only claiming this additional retroactive credit, enter your
name and social security number at the top of the form and enter on line
7 the amount shown in the box to the left of box 8 on your Form
1099-H. You do not have to complete lines 1 through 6 and you do not
have to send in any documentation.
However, if you are also claiming the credit for any month you did not
receive an advance payment, you must complete lines 1 through 6 for
those months and add to this total the amount shown in the box to the
left of box 8 on Form 1099-H and enter this total amount on line 7. You
must submit all required documentation for those months you did not
receive an advance payment.
Repayment of advance payment received in error. If you received an
advance payment in any month not checked on line 1, you must reduce
the amount on line 6 by the total of that advanced payment(s). (If you are
also claiming the 7.5% additional retroactive credit shown in the box to
the left of box 8 on Form 1099-H, combine the amount on line 6 with the
additional retroactive credit before subtracting the advance payment
received in error.)
If the result is less than zero, show the amount on line 7 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.

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

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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.”
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. In October, you paid $500 of qualified health insurance
premiums for yourself and $250 for your qualifying family members. In
November, you paid $262.50 (35% of the $750 November premium) to
“U.S. Treasury–HCTC” and received an advance payment of $487.50
(65% of the $750 November premium). Form 1099-H shows the total
advance of $487.50 in box 13. Form 1099-H also shows $56.25 (your
additional 7.5% retroactive credit for November) in the box to the left of
box 8. You would include $750 on line 2, column B, for the October
insurance payment. You would not include any part of the November
insurance premium since you already received the advance (monthly)
payment for this month. You must attach copies of your health
insurance bills and proofs of payment for October for you and your
qualifying family members totaling $750, along with any other required
documents. Also, to receive the additional 7.5% retroactive credit for
November, you must add the $56.25 from the box to the left of box 8 of
your Form 1099-H to the total amount on line 7.
Example 2. You are eligible to claim the HCTC for February, March,
and April. You paid $500 of qualified health insurance premiums in each
month for yourself and $250 for your qualifying family members directly
to your qualified health plan. The amount on Form 8885, line 2, column
A is $750 (the February premium). The amount on line 2, column B, is
$1,500 ($750 each for March and April). You did not receive any HCTC
advance (monthly) payments during 2011. You would enter $600 (80%
of your $750 February premium) on line 6, column A, and $1,087.50
(72.5% of your March and April premiums) on line 6, column B. Your
total health coverage tax credit, line 7, would be $1,687.50 ($600 (for
February) plus $1,087.50 (for March and April)). You must attach copies
of your health insurance bills and proofs of payment for February,
March, and April for you and your qualifying family members totaling
$2,250 ($750 for each month), along with any other required documents.