FROM THE OFFICE OF PUBLIC AFFAIRS

Today the Treasury Department announced the new Health Insurance Tax Credit (HITC) that will be included in President Bush's budget for 2003. This HITC would provide a permanent tax credit to make insurance more affordable.

"We need to make sure that all Americans have access to affordable health insurance. The Administration's innovative Health Insurance Tax Credit will help uninsured Americans obtain health insurance coverage to provide greater health security for themselves and their families," stated Treasury Secretary Paul O'Neill

This HITC would create a refundable income tax credit for the cost of health insurance purchased by individuals under age 65. The credit would provide a subsidy for a percentage of the health insurance premium, up to a maximum credit of $1,000 per adult and $500 per child, up to two children. A two-parent family with two children would be eligible for a maximum credit of $3,000. The maximum subsidy percentage would be 90 percent for low-income taxpayers and would phase down with income. Individuals participating in public or employer-provided health plans would not be eligible for the tax credit. The credit could also be used in state sponsored private purchasing pools. In addition, individuals would not be allowed to claim the credit and make a contribution to an MSA for the same taxable year.

This is an improved HITC proposal, compared to the health insurance tax credit proposal in last year's FY 2002 budget. Elements of the current proposal are phased in one-year faster, and it provides additional subsidies for married couples with children.