The Trade Act of 2002 provides that eligible individuals may have advance payments equaling 65% of health insurance premiums paid on their behalf. Payments are made directly to recipients' health insurance providers under a program established by the Department of the Treasury. Advance payments started June 1, 2003, for some eligible individuals.

An eligible individual is an eligible trade adjustment assistance (TAA) recipient (under provisions of the Trade Act of 1974), an alternative TAA recipient, and a Pension Benefit Guaranty Board (PBGC) pension recipient. Qualifying family members are the individual's spouse and any dependent for whom the individual can claim a dependency exemption.

The eligible individual claims the credit on Form 8885, Health Coverage Tax Credit, that is attached to the individual's Form 1040. Any advance payments reduce the amount of the credit figured on Form 8885 for which recipients are eligible. New Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments, is used to report any advance payments made on behalf of the eligible individual. See Who Must File below.

In addition to these specific instructions, you should also use the 2003 General Instructions for Forms 1099, 1098, 5498, and W-2G. Those general instructions include information about:

You can get the general instructions from the IRS website at www.irs.gov or by calling 1-800-TAX-FORM (1-800-829-3676).