Health Coverage Tax Credit (HCTC)

Trade Adjustment Assistance (TAA) Program

What is HCTC?

HCTC is a Federal tax credit program administered by the Internal Revenue Service (IRS). HCTC helps cover the cost of health insurance while you participate in the TAA program to make your health insurance premiums more affordable.

NOTE: The HCTC program does not provide health insurance coverage.

How Does it Work?

Participants in the HCTC program may select either of the following credit options:

  • Yearly credit: You pay 100% of your premium for the entire year and then the IRS will either issue a refund to you or a credit against your federal taxes owed for 72.5% of your premium.
  • Monthly credit: You pay 27.5% of your monthly premium to the IRS. The IRS adds the remaining 72.5% of your monthly premium, and pays your health plan administrator 100% of your monthly payment. This lowers your out-of-pocket payments for your monthly premiums.

NOTE: You may be able to change health care plans to receive the HCTC benefit.

What are Qualified Health Plans?

  • COBRA: You must pay more than 50% of COBRA premiums. If COBRA eligibility ends, HCTC eligibility also ends until you enroll in another qualified health plan.
  • Spouse’s Employer Health Plan: You may enroll in group coverage through spouse’s employer. Your spouse must pay more than 50% of the insurance premium. However, the monthly payment option is not available under this type of plan.
  • Non-Group / Individual Health Plan

The following health plans do not qualify for HCTC:

  • Health Insurance Marketplace health plans
  • Medicare
  • Medicaid
  • U.S. military health system (TRICARE)
  • Children’s Health Insurance Program (CHIP)
  • Federal Employees Health Benefits Program (FEHBP)

Is HCTC Available to My Family Members?

Yes. For any month that you are eligible for HCTC, you can include premiums paid for a qualifying family member for that eligible coverage month. The qualifying family member must:

  • Be enrolled in a qualified health plan for which you paid some or all of the premiums. NOTE: It does not have to be the same coverage as you.
  • Be claimed as a dependent on your federal tax return.
  • Not enrolled in Medicare.
  • Not enrolled in Medicaid.
  • Not enrolled in TRICARE.
  • Not enrolled in CHIP.
  • Not enrolled in FEHBP.

How Do I Participate in the HCTC Program?

  1. Apply for the TAA program.
  2. DWD will then mail a determination letter to both you and the IRS, if you are eligible.
  3. For monthly payments, use these IRS links to enroll:
  4. For the annual tax credit, you pay 100% of your health insurance premium and then submit IRS Form 8885 when you file your annual federal income taxes.
  5. Pay your monthly premiums on time.

REMEMBER: Keep a copy of all documents for your records.

For More Information

Additional information about the program and eligibility requirements is available at http://www.irs.gov/hctc.