What do I do with Form 1099-H

[Howco]

Taxpayer received 1099-H, representing advance payments equalling 72.5% of taxpayer's health insurance premiums. Taxpayer writes a monthly check to US Treasury HCTC for the remaining 27.5% of health insurance premiums.

Does taxpayer need to submit Form 8885?

Can taxpayer use the 27.5% of the premiums paid as a medical expense deduction on Schedule A?

[Bees Knees]

Line 1 of the 1099-H instructions says:

Shows the total amount of HCTC advance payments of qualified health insurance costs that were made on your behalf. Do not report this amount on Form 8885. This amount is in lieu of any credit you will be able to take on Form 1040, 1040NR, 1040-SS, or 1040-PR, because it was paid for you in advance.

IRS Pub 502 talks about the HCTC advance payments. It says:

If you receive a monthly HCTC, you will get Form 1099-H. The form shows you the total of your advance payments and for which months payments were made (including months for which reimbursement credits were paid to you). You cannot claim the yearly HCTC for any month for which you received a monthly HCTC.

IRS Pub 502 also says if you claim the credit, you cannot use the same expenses used to figure the credit as a medical expense deduction on Schedule A. Since the HCTC advance payment is the same as the tax credit except that it is paid in advance, then the same rule must apply. You cannot deduct the taxpayer's cost of the insurance on Schedule A because that cost was used to figure the amount of the advanced credit payment.