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FAQs

Health Coverage Tax Credit (HCTC)

Q: What is the Health Coverage Tax Credit (HCTC)?

A: The HCTC is a federal tax credit that currently enables you to pay just 35% of qualified health insurance premiums. If you are eligible, the HCTC is available to you monthly as premiums become due, or yearly when you file your federal tax return, or a combination of both. In order to receive the HCTC you must be enrolled in a qualified health plan, and meet all HCTC eligibility requirements.

Q: Who is eligible for the HCTC?

A: To be eligible for the HCTC, you must be enrolled in a qualified health plan and meet some general requirements in addition to being:

age 55 through 64 and receive benefits from the Pension Benefit Guaranty Corporation (PBGC), OR
a Trade Adjustment Assistance (TAA), Alternative Trade Adjustment Assistance (ATAA), or Reemployment Trade Adjustment Assistance (RTAA) recipient.
In addition, you must also meet the general requirements as defined by the HCTC program, with the main requirement defined as not being enrolled in Medicare. For a full listing of the general requirements, http://www.irs.gov/individuals/article/0,,id=171007,00.html

Q: What are the qualified health plans of the HCTC?

A: Qualified health plans include the following:

COBRA (federal legislation that lets employees extend their job-based health coverage if they lose their job or a VEBA trust health plan established in lieu of COBRA.
State-qualified health plan: health plans that a state’s Department of Insurance approves as meeting the certain requirements of the Trade Act of 2002.
Spousal Coverage – only applicable if you are paying more than 50% of the premium.
Non-Group/Individual Plans – only applicable if you were enrolled in an individual policy 30 days prior to the date you became eligible for HCTC and your last day of employment

Q: I understand that the HCTC currently will pay for 65% towards my monthly health care premiums. What is that 65% calculated on? My monthly premiums, deductible, or total Out of Pocket Maximums?

A: The Health Coverage Tax Credit (HCTC) is a federal tax credit that currently pays for 65% of qualified health insurance premiums for eligible individuals and their qualified family members. If you pay $300 a month in premiums, then the HCTC would pay for $195 and you would be responsible for $105. Please note the HCTC does not pay for health insurance premiums for family members who are not qualified or for separate dental or vision plans.