The Internal Revenue Service (IRS) announced on December 28 that it will extend the Health Coverage Tax Credit (HCTC) through December 31, 2021. The HCTC, which allows a tax credit to offset up to 72.5 percent of the cost of health insurance premiums, applies to workers who lost their jobs due to trade-related reasons or who are older workers receiving pensions from the Pension Benefit Guaranty Corporation (PBGC).
Specifically, the HCTC is available for the following workers (as well as other qualifying family members):
- TAA recipients. Individuals who are receiving (or would be receiving in the absence of unemployment benefits) a trade adjustment allowance (TAA). To be eligible for a TAA, an individual must (a) have separated from a trade-impacted company (that is, a company determined by the U.S. Department of Labor (DOL) to be threatened by foreign trade) within a specified period, (b) have been employed with the company for at least 6 months during the year before separation, (c) be eligible for unemployment benefits, and (d) satisfy certain training requirements.
- ATAA recipients. Individuals who are receiving an alternative trade adjustment allowance (ATAA). To be eligible for an ATAA, an individual must (a) have separated from a trade-impacted company within a specified period and not return to employment at that company, (b) be aged 50 or older, (c) become reemployed in a full-time position within 6 months of the separation from employment from the trade-impacted company and maintain such employment, and (d) earn less than $50,000 per year from employment.
- Individuals who are aged 55 or older and are receiving pension benefits paid by the PBGC. If the PBGC pension benefit was paid as a lump sum, the individual still is eligible for the HCTC if monthly payments would have been paid absent the lump sum.
Individuals are deemed eligible for TAA/ATAA benefits through a certification process by the DOL or state labor agencies.
The HCTC has undergone several modifications and extensions since its original enactment in 2002 and was due to expire on December 31, 2020. With the extension, the IRS noted that HCTC participants may be able to work with their vendors or providers to be placed back on health coverage that qualifies for the HCTC and either reenroll in the HCTC Advance Monthly Program or claim the HCTC on their annual federal income tax return filed next year.
Gwen Cofield is an editorial/communications professional with more than 20 years of experience in the for-profit, non-profit and government sectors.