Health Coverage Tax Credit Update

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IRS working to implement new law; Reminds taxpayers to continue existing health coverage during interim period.

The Trade Preferences Extension Act of 2015 (Public Law 114-27), enacted June 29, 2015, extended and modified the expired Health Coverage Tax Credit. Previously, those eligible for HCTC could claim the credit against the premiums they paid for certain health insurance coverage through 2013. The HCTC can now be claimed for coverage through 2019.

The IRS is currently reviewing the legislation and is working with its partners, the Pension Benefit Guaranty Corporation and the Department of Labor State Workforce Agencies, to determine the best way for taxpayers to receive this important credit. The law is similar to the version of the credit that expired in 2013 but includes modifications that affect how the credit is administered. The IRS will provide guidance on the credit in the near future, including guidance for taxpayers who also qualify for the Premium Tax Credit under the Affordable Care Act.

In the meantime, the IRS offers the following guidance to anyone who may be eligible for the Health Coverage Tax Credit:

  • Until the IRS provides further information and can confirm taxpayer eligibility for HCTC, taxpayers should not discontinue or change current health coverage, including COBRA or Health Insurance Marketplace coverage.
  • The HCTC is retroactive for tax year 2014, meaning eligible taxpayers can claim it for 2014 by filing an amended return.
  • More details will be available soon and taxpayers should wait for this information before they file an amended return.

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