Purpose: This IRM provides guidance on the Health Coverage Tax Credit (HCTC).The Enrollment Team evaluates eligibility for the monthly advance payment, enters information from Form 13441-A into a database, authorizes payment of the credit, and sets up approved HCTC vendors for ACH payments.

Audience: The HCTC Enrollment Team, in Austin, is the primary user of this IRM.

Policy Owner: The Director of Submission Processing

Program Owner: Wage and Investment (W&I) Submission Processing

Primary Stakeholders: The HCTC Enrollment Team in Austin

Program Goals: The information contained in this IRM provides the HCTC Enrollment Team instructions to evaluate eligibility for the advance monthly payments of the HCTC.

Service Center Directors, Headquarter Branch Chiefs, and Headquarter Analysts do not have the authority to approve deviations from IRM procedures. Any request for an exception or deviation to an IRM procedure must be elevated through appropriate channels for executive approval. This will ensure that other functional areas are not adversely affected by the changes and that it does not result in disparate treatment of taxpayers.

See guidelines in IRM 1.11.2, Internal Revenue Manual (IRM) Process. Request for an IRM deviation must be submitted in writing and signed by the Field Director, following instructions from IRM 1.11.2.2.4. Any disclosure issues will be coordinated by the Program Owner. No deviations can begin until they are reviewed by the Program Owner and approved at the Executive Level. All requests must be submitted to the Submission Processing Headquarters IRM Coordinator.

Report all time spent in processing or handling HCTC forms with the organization, program, and function codes (OFP) below.

All forms, correspondence, or other participant documentation must be processed following the general guidelines below.

Any necessary editing should be done in erasable red ink.

TE stamp each document processed.

Verify the received date is present and legible. If not, edit the first available date from the list below in the "Rcvd MMDDYY" format.

All forms, correspondence, and documentation should be stapled to the back of Form 13441-A, Health Coverage Tax Credit (HCTC) Monthly Registration and Update, in Received Date order with the oldest (Original) Form 13441-A stapled to the top. If an updated Form 13441-A is submitted, then any prior Form 13441-A should be "X’d."

If any information on HCTC forms is "X’d," crossed out, or lined through, either pre-printed or manually, it should be considered invalid.

If a record is entered in error, refer the application to the HCTC Coordinator.

Never obliterate, alter or erase the original entry on a document when deleting or correcting an entry. Circle out invalid information, making sure the original entry remains legible.

When detaching documentation, edit an action trail:

Comments must be entered into the HCTC database for any correspondence, inquiry, or action to participants account. Comments must be specific and include the nature of the action taken.

If a change to the participant’s database entry changes the "Last Modified" date, all entries in the database must be verified for accuracy. Ensure all information in the database is supported by documentation in the applicant’s file.

Anytime a record is updated in the database, see IRM 3.11.29.12, Setting the Status of the Application.

The participant’s file should be present when processing updates which affect the Last Modified date, to allow the required research to be performed.

Forms and correspondence received by the HCTC Enrollment Team are to be processed or routed within 5 business days from the date received by the Enrollment Team.

If the participant’s Participant Identification Number begins with 100006, they are an interim participant who was added to the program before the current database was available. When processing a change to an interim participant’s database entry, review all blank fields (both required and non-required).

In some cases, it is necessary to elevate a question or issue to P&A and/or HQ for resolution. Once elevated, suspend the document until a response is received but not longer than 10 business days. Once a response is received, the document should be rebatched and processed following normal timeliness guidelines.

Some database fields have character restrictions which prevent information from being entered as provided/perfected. If one or more characters are invalid for the field, enter the information while omitting the special character.

For Tax Examiners to process, edit, and review HCTC forms, they must request access to the HCTC Database through the Business Entitlement Access Request System (BEARS).

Roles are granted based on job duties as follows:

A warning that the database is for authorized use only appears when accessing the database. Users must accept the terms of use to open the database.

Form 13441-A , Health Coverage Tax Credit (HCTC) Monthly Registration and Update, is processed in two operations in Austin Submission Processing: Receipt & Control (RCO) and Document Perfection (DPO).

Batching Form 13441-A, Health Coverage Tax Credit (HCTC) Monthly Registration and Update, occurs in the Entity Enrollment Team.

Separate new Forms 13441-A from updated Forms 13441-A. Batch new and old separately.

Follow instructions in IRM 3.10.5.6.4, Image Control Team (ICT) Batch Creation Screen, for creating batches in the BBTS system.

Batch Forms 13441-A by the date the form was received in Entity, in groups of 25. Each form in the batch must have been received on the same date.

Print batch transmittals and associate the transmittals with their batches.

Stage batches by the date received in the designated work area.

Verify the applicant signed the form in Part 6 prior to updating the database. See IRM 3.11.29.9.6, Inputting Form 13441-A Part 6: Form Completion.

Edit a Received Date on the first page of Form 13441-A, if missing. See IRM 3.11.29.4, HCTC Program General Information.

Stamp your Tax Examiner number in the upper left of the first page of Form 13441-A.

Verify Form 13441-A is batched correctly. If the form is in the wrong batch, remove the form and have the clerk re-batch.

New enrollments should be reviewed for QFMP status, see IRM 3.11.29.15, Qualifying Family Member Participant (QFMP).

A health insurance bill (or other document(s) which meet the criteria below) dated within the last sixty days must be present when enrolling or if updating their vendor and/or premium information. If information below is not available, see IRM 3.11.29.13, Correspondence:

Updated Forms 13441-A require a signature in order to be processed. New enrollments and certain updates require the certification checkbox in Part 2 to be checked (see IRM 3.11.29.9.2).

If the signature is not present, do not update the database until a response is received. See IRM 3.11.29.9.6.

If a remittance is discovered in any HCTC documentation:

Before entering Form 13441-A, Health Coverage Tax Credit (HCTC) Monthly Registration and Update, into the database, search for an existing application from the participant already in the database.

If the applicant is already in the database:

If the applicant is not yet in the database, determine which name should be listed as the applicant in the database:

If the eligible recipient and the QFM(s) have separate coverage and Participant Identification Numbers are not already established for each:

If the record is being established under someone other than the eligible recipient, edit the file as follows:

There are several statuses available in the HCTC database for participants depending upon their application. If you are unable to change a status on an application, then refer to HCTC Coordinator for elevation to P&A.

Anytime a record is updated, use the following chart to determine the status for the application.

When removing an applicant from an enrolled status, do not delete existing information from the database unless specifically instructed. The most recent information is retained.

The following statuses are no longer in use:

Following are several statuses that are systemically generated by the HCTC database. If you believe a systemically generated status is incorrect, elevate to P&A.

For the statuses in the table below, the database will automatically unenroll the participant. The participant must be notified 45 days prior to the loss of eligibility based on date entries in the fields listed in the table. See IRM 3.11.29.13.1, Letter 3772, End of Program Letter.

When the database moves a previously enrolled participant into the status "Cancelled: Ineligible - Prison File Match" , elevate to P&A for review.

Clerks review each Form 13441-A, Health Coverage Tax Credit (HCTC) Monthly Registration and Update, before releasing to Files and/or the storage area. They verify that all pages of Form 13441-A are present and supporting documents are attached.

Each packet with Form 13441-A may contain one or more of the following:

Clerks verify that the PIN (Participant Identification Number) on the Enrollment letter matches the PIN on the first page of Form 13441-A.

In the Batch Block Tracking System (BBTS), Clerks release Forms 13441-A and associated documents to Files and/or the storage area.

Place each batch of Forms 13441-A, along with the Form 9856, Attachment Alert, and two copies of Form3210, Document Transmittal, for the batch, into a gusset folder. On the tab of the gusset folder, write the range of PINs, the program name "HCTC," and the tax year of the applications.

Route Forms 13441-A numbered with a PIN to Files or a designated storage area at the Austin Submission Processing campus to be held until retirement.

Retain Forms 13441-A at the Austin processing center for six (6) years, beginning in 2016. After the end of the sixth year, retire Form 13441-A to the Federal Record Center (FRC) for an indefinite period. See IRM 3.11.29.25, Record Retention Requirements.

Include an Application Identification Sheet (AIS) and highlight the correct PIN. The AIS is used to attach documents to the applicant’s packet.

The Enrollment Team is responsible for sending the following letters.

Do not save any correspondence containing participant’s Personal Identifiable Information (PII) to your desktop or personal storage drive.

Remove all editing marks prior to returning any document to an applicant.

When it is necessary to correspond with taxpayers, correspondence should be professional (i.e., correct spelling, punctuation, and grammar).

Correspondence letters are available through the HCTC SharePoint.

Correspond only after you have entered the entire Form 13441-A into the HCTC database.

Enter comments into the HCTC database, including what letter was sent and why the letter was sent (correspondence conditions).

All correspondence must include the participant’s Participant Identification Number.

Address all decedent correspondence to "Estate of" and the decedent’s name. (e.g., Estate of John Smith)

One copy of all correspondence is attached to the applicable applicant package in Received Date order with the oldest stapled to the top. See IRM 3.11.29.4, HCTC Program General Information.

All letters are subject to review by the Improvement Team.

Retrieve E-faxes daily. Check the E-fax folder daily for replies/missing information. Print the reply and associate it with the original submission on the suspense wall.

Each correspondence letter may trigger a change in the status of the application. See IRM 3.11.29.10, Setting the Status of the Application.

Allow applicant 45 days for responding to correspondence. A reply is late on the 46th day after correspondence.

Duplicate Form 13441-A: If a Form 13441-A is received which appears to be a duplicate of the current 13441-A:

If, after review, the Form 13441-A still appears to be a duplicate, process the Form 13441-A normally, but do not re-issue any correspondence. Comment the database to indicate that a duplicate 13441-A was received, and no correspondence was issued.

Undeliverable Correspondence: When undeliverable correspondence is received, research the database, the file, and/or IDRS for an alternative address.

Participant correspondence may be received by e-mail, fax, or forwarded from another department for processing. Form 4442 are received from Accounts Management (AM). Participant correspondence and items received from Lockbox (US Bank) should be processed as Forms 4442.

When participant correspondence or a Form 4442 is received, review the inquiry.

When forwarding Form 4442 to AM, include a copy of any correspondence (member, third party, etc.) to assist customer service representatives (CSRs) when responding back to HCTC participants.

Return Form 4442 to the originator if:

When P&A issues a substitute Form 4442 with instructions to the Enrollment Team:

Due to the potential for specific harm to participants - up to and including lapses of health insurance - it is necessary to expedite some cases through the enrollment/update process. If an expedite request is issued, the document should be hand-walked through the enrollment/QR process before the end of the business day (unless otherwise specified).

Form 4442 must be attached to the back of Form 13441-A. See IRM 3.11.29.4, HCTC Program General Information.

A Qualifying Family Member Participant (QFMP) is a family member (spouse or dependent) who may maintain their HCTC enrollment for 24 months after one of the following qualifying events:

A QFMP relies on the eligibility information of the eligible recipient but must meet all other requirements for enrollment.

New enrollments should be reviewed for QFMP status. Possible indications that Form 13441-A is related to a QFMP include (but are not limited to):

QFMP due to Medicare Eligibility – In most cases, an individual becomes eligible for Medicare the first day of their birth month the year they turn 65. An individual will be treated as HCTC eligible during their entire birth month in which they turn 65 for purposes of computing the HCTC credit for QFMPs during the 24-month QFMP eligibility period.

QFMP due to Divorce – The spouse of the eligible recipient is eligible for enrollment following a divorce. Eligible dependents may be included on either policy.

QFMP due to Death – The spouse and/or dependents of a deceased eligible recipient are eligible for enrollment.

Determine the QFM Start Date field using qualifying event date:

If an individual is identified as a QFMP:

Taxpayers can request 72.5% reimbursement for premiums they paid directly to their administrator while waiting to be accepted into the Advance Monthly Program by using Form14095, The Health Coverage Tax Credit (HCTC) Reimbursement Request Form.

General: When a Form 14095 is received in the Enrollment Team:

P&A: When a Form 14095 is received, P&A will research eligibility for reimbursement.

Submit the spreadsheet to CFO with the following information:

Due to program constraints, Forms 14095 have an annual cutoff of September 30th and will resume after the beginning of the new year. Any reimbursement requests with a Received Date stamp after September 30th will need to be claimed on the participant’s federal tax return using Form 8885, Health Coverage Tax Credit. Forms 14095 with a Received Date stamp after September 30th for the current processing year will be returned to the participant with Letter 4510, using the open paragraph for the September cutoff date. See IRM 3.11.29.13.2, Letter 4510, HCTC Reimbursement Request - Denial.

Enrollment Team: After processing is complete, P&A will return forms to the Enrollment Team for batching, correspondence, and comments.

The Enrollment Team will prepare the required correspondence indicated by P&A on the substitute Form 4442 and add comments to the HCTC database. P&A will send an email confirmation, to HQonce correspondence is issued. See IRM 3.11.29.13, Correspondence and IRM 3.11.29.4, HCTC Program General Information.

Attach Forms 14095, supporting documentation, and letters to the back of the participant’s original Form 13441-A, Health Coverage Tax Credit (HCTC) Monthly Registration and Update, as instructed in IRM 3.11.29.4, HCTC Program General Information

Replies to correspondence for Form 14095, The Heath Coverage Tax Credit (HCTC) Reimbursement Request Form, should be elevated to P&A. This includes participants appealing the decision or requesting additional information on the determination.

P&A will review replies and return forms to the Enrollment Team for batching and correspondence.

Each month the Department of Treasury transmits 100% of the insurance premium payments to the Health Plan Administrator (HPA) or Third-Party Administrator (TPA) through a payment file for all enrolled participants associated with the HPA/TPA’s vendor number. This payment file is used to reconcile payments for each participant.

If after reconciliation it is discovered participants had an unapproved vendor, duplicate payments, misapplied payments, were using an incorrect Participant Identification Number (PIN), among other instances, then HPA/TPA/Participants may be refunded their portion of the insurance premium.

Payment reconciliation is handled on a case-by-case basis by HQ with two different processes: participants and vendors.

For participants, the reimbursement process is completed by HQ on a spreadsheet and is submitted to Chief Financial Office (CFO).

Once the SF-1034 reimbursement spreadsheet for individuals has been submitted to CFO, it will be provided to the Enrollment team for batching, correspondence, and comments. P&A will send an email confirmation, to HQonce correspondence is issued.

For vendors, the disbursement process is completed by HQ and Standard Forms 1034 are submitted to CFO.

The 1034 reimbursements/disbursements will be added to the payment history within the HCTC database by P&A.

If the Enrollment Team is contacted regarding a reconciliation issue, elevate to P&A.

Any documentation related to Form 8885, Health Coverage Tax Credit, received in the Entity unit should first be reviewed to determine if it is related to the Advanced Monthly Program or Form 1040.

Health Plan Administrators (HPA) and Third Party Administrators (TPA) must be able to receive payments via Electronic Funds Transfer (EFT) processed through the Direct Deposit Program as an Automated Clearing House (ACH) payment.

HPAs/TPAs must be enrolled in the EFT program to receive insurance premium payments for their customers who are participants in the HCTC program. Receiving electronic payments ensures timely, accurate payments and reduces the risk of payments being misdirected within the HPA/TPA’s organization.

HPAs and TPAs must complete Form 3881-A, ACH Vendor / Miscellaneous Payment Enrollment – HCTC, to enroll and begin receiving HCTC payments. If a vendor is not set-up as an approved HCTC vendor, correspond with Letter 4540 using selectable paragraph 12. See IRM 3.11.29.13.4, Letter 4540, HCTC Candidate Eligibility Denial.

Once a HPA/TPA has sent Form 3881-A and is established to receive payments, they do NOT need to submit another Form 3881-A if additional individuals enroll after the HPA/TPA is established.

However, a HPA/TPA must recertify each year by submitting a new Form 3881-A. See IRM 3.11.29.20.2, Recertifying with Form 3881-A, ACH Vendor / Miscellaneous Payment Enrollment – HCTC.

HCTC participants are instructed to send their payments to a lockbox depository for payment processing.

If payment(s) received at the lockbox require additional information to process, such as a missing or invalid Participant Identification Number, Lockbox will request the missing information from the Enrollment Team, via email by 12:00 p.m. CST daily.

The Enrollment Team will research the HCTC database for missing information/invalid Participant Identification Number and provide a response to Lockbox by 10:00 a.m. CST the next business day ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

If the Enrollment Team supplies sufficient information for the missing/invalid PIN, the Lockbox site will process the remittance.

If a valid PIN number cannot be located, Lockbox will reject the payment back to the participant with all original contents.

The Lockbox site will return rejected payments/unprocessable items back to the participant, with a reject letter. A copy of the reject letter and all contents that were mailed to the participant will be sent from Lockbox to the Enrollment Team, with a Form 3210, Document Transmittal, as part of a daily mail out package.

As part of the daily package mail-out to the Enrollment Team, Lockbox will include correspondence items and envelopes received at the Lockbox site in which the site processed the participant’s remittance. Correspondence includes an item received that is not a payment coupon or remittance.

The Lockbox site must use an approved dedicated overnight private delivery/ freight service (e.g., FedEx, DHL, and UPS) to deliver shipments to the Enrollment Team.

Once the shipment is received, the Enrollment Team will:

If Lockbox does not have a daily mail out package to send to the Enrollment Team, they will send an e-mail to the Stakeholder mailbox to advise there is no mail out package.

CFO will send an e-mail to the Stakeholder mailbox when insurance premium payments have been returned due to insufficient funds.

Insufficient Funds are worked by HQ.

The Rejected payments are worked by HQ.

CFO will send notification of rejected payments to the stakeholder inbox.

Once official notification of rejected payments is received, the payments are added to the Return of Funds (ROF) spreadsheet and tracked for the 27.5% reimbursement allowed on Standard Form 1034, Public Voucher for Purchases and Services other than Personal. See IRM 3.11.29.18, SF-1034, Public Voucher for Purchases and Services other than Personal, Monthly Payment Reconciliation.

Once payments are researched to determine both the cause of the return and where the payment should now be applied, they are added to the database by P&A and comments are added or updated in the database.

Operations Assistance Request (OARs) from Taxpayer Advocate Services are normally received through the Stakeholder mailbox (*W&I HCTC STAKEHOLDER ENGAGEMENT <WI.HCTC.Stakehldr.En@irs.gov>) and are worked by P&A.

If any OARs are received outside of the Stakeholder mailbox, refer to the HCTC Coordinator to be elevated to P&A.

Forms 13441-A, Health Coverage Tax Credit (HCTC) Monthly Registration and Update, must be retained in AUSP Files or designated area for six (6) years, then retired to the Federal Record Center (FRC) to follow the Record Retention requirements for Document 12990, Records and Information Management Records Control Schedules.

The Lockbox site must capture an image of the front and back of all remittances and the payment posting documents (vouchers, facsimiles, remittance photocopies) for all transactions they process.

The following daily reports are prepared and submitted by Lockbox through the Stakeholder mailbox.

The Daily Deposit Production Report shows payments processed and other activity, such as overpayments.

The Payment Reject Letter Tracking Report must include the following:

If the reject reason is "H" (other), a comment must be added to explain the reason the payment was rejected. If payment was rejected for an invalid or missing PIN (Reason Code D) and faxed to the Austin Enrollment Team, the date and time of fax is entered.

The Lockbox Site must retain copies of rejected items such as reject letters, original payment coupons, remittances and correspondence on site for one year in retrievable format to support responses to government inquiries.

There are three weekly reports for the HCTC program: Weekly Statistical Report, HCTC Production Report, and the HCTC Weekly Refund Report.

Weekly Statistical Report. The report is received every Monday morning from the HCTC Coordinator or Entity Team Work Leader to provide weekly data on HCTC volumes.

HCTC Production Report. This report is received from P&A each Monday.

HCTC Weekly Refund Report. This report is received weekly from IRS Beckley Office and is used by HQ and P&A to reconcile payments. The report shows return of funds from Health Plan Administrators (HPAs)/ Third Party Administrators (TPAs). It is received with a zero balance if there are no return of funds for the week.