What is Health Coverage Tax Credit (HCTC) & How to Claim It?

Health Coverage Tax Credit is administered by the IRS and provides a tax credit to eligible individuals to pay for monthly health insurance premiums. However, there are requirements and qualifications to claim the tax credit. Individuals who have insurance from the Affordable Care Act Marketplace are not eligible, but those who have COBRA may be eligible. 

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What is Health Coverage Tax Credit

The Health Coverage Tax Credit (HCTC) allows for eligible individuals to receive a tax credit to offset the cost of their monthly health insurance premiums for 2021, but only if they have qualified health coverage for the HCTC (below, we explain more about what is considered qualified health coverage). However, a health plan offered through the Health Insurance Marketplace has not qualified coverage for the HCTC. 

The HCTC has been extended for all coverage months beginning in 2021, according to the IRS. With this extension, participants may be able to work with their vendors or providers to be placed back on health coverage that qualifies for the HCTC and either re-enroll in the HCTC Advance Monthly Program, which allows for advance payments for their health insurance premiums, or they can claim the HCTC on their annual federal income tax return filed next year.