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Latest News - Recovery Act Changes the HCTC
The Trade Adjustment Assistance Health Coverage Improvement Act was recently passed as part of the American Recovery and Reinvestment Act of 2009. The HCTC is changing as a result of this new law.
Changes That Affect All HCTC Eligible Individuals
- The HCTC now pays a greater portion of your health insurance costs. The tax credit has increased from 65% to 80% of qualified health insurance premiums. If you are a monthly HCTC participant, the 80% tax credit amount will be reflected on your HCTC invoice beginning in April 2009.
- Newly-enrolled participants will soon be able to receive a credit on their HCTC account for qualified health insurance payments they paid in 2009 while enrolling in the monthly HCTC Program. The HCTC Program will begin offering this option in August 2009.
- The HCTC will soon be available to your family members for a longer period of time. Beginning in January 2010, qualified family members may continue receiving the HCTC for up to 24 months (but not beyond December 31, 2010) after the primary eligible individual experiences the following life events:
- Enrollment in Medicare
- Divorce
- Death
Changes That Affect Certain Groups of HCTC Eligible Individuals
- Training and waiver requirements have changed for certain TAA recipients, making it easier to be eligible for the HCTC.
- Section 1899 F of the TAA Health Coverage Improvement Act of 2009 temporarily extended COBRA benefits for HCTC-eligible individuals through the timeframes listed below (but not beyond December 31, 2010). Employers are responsible for extending COBRA benefits for these individuals and should check with their counsel if they have questions about the new law.
- TAA-eligible and ATAA-eligible individuals can receive COBRA for as long as they continue to meet the definition of TAA-eligible and ATAA-eligible individuals.
- PBGC benefit recipients can receive COBRA as a lifetime benefit, and in the event of the benefit recipient's death, their surviving spouse and dependents can receive COBRA for an additional 24 months.
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COBRA Health Insurance Continuation Premium Subsidies make individuals ineligible for the HCTC during the same month. If you receive a 65% COBRA Subsidy through your former employer - a new program established by the economic stimulus bill – you will not be eligible to receive the HCTC during that same month. The new COBRA Program is different from the HCTC Program.
NOTE: The Trade Adjustment Assistance Health Coverage Improvement Act of 2009 expires on December 31, 2010. At this time, the changes to the HCTC - including the new timeframes for extended benefits - are only valid for the remainder of 2009 and 2010.
Need More Information About These Changes?
The HCTC Program is working quickly to provide you with detailed information about these changes, including information on other provisions of the stimulus law that affect the HCTC. New information will be posted as it is available, so please refer back to this page for the latest information. Please be aware that some of the HCTC materials available to you – including pages and documents on this website – have not been updated to reflect these recent changes.
For more information about the new COBRA Health Insurance Continuation Premium Subsidy program, visit the IRS News Room or call the IRS at 1-800-829-1040. Information on the new COBRA program is not available from the HCTC Program.
HCTC Overview
The HCTC helps certain trade-affected workers, retirees, and their families pay their health insurance premiums. The HCTC makes health coverage more affordable by paying 65% of health insurance premiums for individuals who are eligible for the tax credit.
The HCTC is a refundable tax credit - it is paid in full no matter how much federal income tax an eligible individual owes. The HCTC is available on a monthly basis to help individuals pay their health insurance costs as they become due or on a yearly basis when they file their federal tax return. The HCTC Program partners with various federal and state agencies and Health Plan Administrators (HPAs) to deliver the tax credit to eligible individuals.
History and Purpose of the HCTC
The HCTC was created as part of the Trade Act of 2002. Congress created the HCTC Program to help:
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workers who lost their jobs due to trade and qualified for Trade Adjustment Assistance (TAA) or Alternative Trade Adjustment Assistance (ATAA)
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retirees, over age 55, whose pensions were taken over by the Pension Benefit Guaranty Corporation (PBGC)
The HCTC legislation also provided that family members of these trade-affected workers and retirees can receive the tax credit.
Congress understood that losing one's health coverage could be as distressing as losing one's job or having one's pension taken over. The purpose of the HCTC, therefore, is to make health coverage more affordable for these groups of people who otherwise might not be insured. The HCTC is unique, because it is the first time a federal tax credit is being used to help people who are affected by trade or employers experiencing financial hardship afford health insurance coverage.
The HCTC was first made available on a monthly basis in August 2003, and on a yearly basis for Tax Year 2002. The HCTC Program continually makes operational improvements to better administer this pioneering tax credit.
Return to the HCTC Program home page.
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