Health Coverage Tax Credit
for
Displaced Workers Due to Trade Agreements
Who: Individuals receiving benefits from:
1. The Trade Adjustment Assistance Program (TAA).
TAA is a program to reduce the impact on individuals from imports in certain sectors of the economy.
2. The Alternative Trade Assistance Program (ATAA).
ATTA is a program that helps individuals over the age of 50, who obtain new employment within 26 weeks of their separation, with a wage subsidy to bridge gap between their old and new employment.
3. The Pension Benefit Guarantee Company (PBGC), who are age 55or older.
The PBGC protects individuals with private-sector defined benefit pensions if the plan goes bankrupt.
4. Qualifying family members (eligible individual's spouse or dependent) of any of the above.
When: The Trade Preferences Extension Act of 2015 retroactively reinstated, extended, and modified the Health Coverage Tax Credit (“HCTC”) from 2014 through 2019.
What: The HCTC is available to certain displaced workers certified by DOL as eligible.
The HCTC is available each month to eligible individuals who:
Pay premiums for and are covered by qualified health insurance;
Are not in prison ;
Cannot be claimed as dependent on someone else's tax return; and
Do not have other specified coverage, including Medicare, Medicaid, CHIP, TriCare, and FEHBP.
Executive Summary: The HCTC is a refundable tax credit that allows certain individuals to receive a subsidy for their health insurance. The previous HCTC expired on January 1, 2014.
The new 72.5% HCTC is a 6-year extension, retroactive to 1/1/2014 through 12/31/2019.
The 2015 Act contains several new provisions, including the following:
Certified individuals may claim retroactive payments from January 1, 2014 through July 6, 2015 on an amended tax return.
By July 6, 2016, the Secretary of Treasury must establish a program for making direct payments to providers of qualified health insurance.
The term “qualified health insurance” from January 1, 2014 until January 1, 2016 includes individual coverage purchased through an exchange established under the ACA.
The term “qualified health insurance” effective January 1, 2016 specifically excludes individual coverage through an exchange established under the ACA.
Removed the requirement that the individual must be covered during the entire 30-day period before the individual was separated from employment.
Provides rules for coordination with the ACA premium tax credit.
Removed the COBRA rule regarding bridging a 63- day or longer break in creditable coverage.
Actions: If you are an individual who has lost your job as a result of a trade agreement, you may be eligible for a HCTC. Check with the IRS, your accountant, broker, or other financial advisors you may have access to. Group plans may, but are not required to, participate in HCTC. Check to see if you may qualify for a retroactive tax credit during the period January 1, 2014 to July 6, 2015.
The information presented and contained within this article was submitted by Ronald E. Bachman, President & CEO of Healthcare Visions and Chairman of the IHC Editorial Advisory Board. This information is general information only, and does not, and is not intended to constitute legal advice. You should consult legal advisors to determine the laws and regulations applicable to your company. Any opinions expressed within this document are solely the opinion of the individual author.