Step 3 - Qualified Health Plan
The third eligibility requirement for the HCTC is being enrolled in a qualified health plan. If you are already enrolled in a qualified health plan then you meet this requirement and may be eligible to receive the tax credit. If you do not currently have a qualified health plan but you can enroll in one, you may be eligible for the HCTC once you enroll.
Enrolling in a qualified health plan does not guarantee you will receive the tax credit because you must meet all the eligibility requirements. Additionally, in order to register for the monthly HCTC Program, your health plan administrator must agree to participate by accepting monthly payments from the HCTC Program.
If you have family member(s) that want to receive the HCTC, they must also be enrolled in a qualified health plan, either under the same qualified plan as you or under a separate qualified health plan.
Types of Qualified Health Plans
The following types of health insurance are qualified for the HCTC:
1) COBRA (Consolidated Omnibus Budget Reconciliation Act)
COBRA is federal legislation that lets you extend your job-based health coverage if you lose your job or run into other qualifying events that cause you to lose your health insurance.
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If you pay more than 50% of the cost for COBRA, you can receive the HCTC
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If you pay 50% or less of the cost for COBRA, you cannot receive the HCTC
2) State-qualified health plan
These are health plans that a state's Department of Insurance approves as meeting the requirements of the Trade Act of 2002 for the HCTC. You must buy a state-qualified health plan directly from an insurance company or other organization designated by your state. A state-qualified health plan can be a private health insurance plan offered by a company or a public health insurance plan offered by a state. This type of plan is not available through an employer.
You can view the HCTC State-Qualified Health Plans page to see if a plan is available in your state.
There may be multiple health plan options available to you in your state. You should review and compare these options to decide on the best choice for you and your family.
3) Spousal coverage
Spousal coverage is group health insurance that is available to you through your spouse’s current or former employer.
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If you and/or your spouse pays more than 50% of the cost of the spousal coverage, you can receive the HCTC
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If you and/or your spouse pays 50% or less of the cost of the spousal coverage, you cannot receive the HCTC
Any portion of the cost for spousal coverage that is paid for before taxes are taken out is considered to have been paid by the employer. Therefore, any pretax contribution for health insurance should be included in the cost for which the company pays.
If you have spousal coverage, you can only receive the monthly HCTC if it is COBRA. If your spouse’s health insurance is not COBRA, you can only receive the yearly HCTC on your federal tax return.
4) Non-group/individual health plan
This type of health insurance is sold by a private health insurance company, broker or agent to one individual or one family at a time. This is not group health insurance.
Caution: In order to receive the HCTC with this type of health insurance, your first day of coverage must have started at least 30 days before your last day with the company that made you eligible for PBGC pension payments or trade adjustment benefits. Because of this 30-day requirement, non-group/individual coverage is rare for the HCTC.
Additional Requirements for ATAA Recipients
There are stricter health plan criteria for ATAA benefit recipients. If you are an ATAA benefit recipient, you are not eligible for the HCTC if one of the following applies to you:
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You are enrolled in a qualified health plan and your or your spouse's current or former employer pays for any portion of the cost of coverage (this includes amounts you or your spouse pays before taxes are taken out)*
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You could enroll in qualified health plan where you or your spouse’s current or former employer would pay 50% or more of the cost of coverage (even if you refuse the coverage)*
* The following types of health plans are exceptions to these additonal ATAA requirements: COBRA, state-based continuation coverage (mini-COBRA), or a special insurance program entered into by a state and an employer designed to qualify for the HCTC
What the HCTC Pays For
The HCTC will pay for:
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comprehensive, major medical insurance coverage
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certain supplemental insurance coverage types such as:
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Prescription-only plans
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Mental health coverage
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Substance abuse coverage
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Hearing coverage
What the HCTC Cannot Pay For
The HCTC cannot pay for:
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a separate dental or vision plan that was not included as part of your comprehensive major medical coverage
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portions of a health insurance premium that are separately added options, such as dental, vision, or long-term care coverage to your major medical coverage. For example:
$100 of your premium pays for comprehensive major medical coverage
$10 of your premium pays for dental coverage you separately add
$10 of your premium pays for vision coverage you separately add
The total premium paid to your health plan is $120, but the amount you can claim for the HCTC is only $100. Therefore, if you are eligible for the HCTC you can receive a credit equal to $65, or 65% of the $100 cost for major medical coverage.
Return to the HCTC Eligibility Requirements and How to Receive the HCTC page.
Return to the HCTC Program home page.
Go to the HCTC Quick Links page to view a glossary of terms, FAQs and additional resources.
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