Eligibility

 To meet the HCTC candidate requirements, you must be either a:

• Pension Benefit Guaranty Corporation payee (PBGC payee) who is 55 years old or older; or
• Trade Adjustment Assistance recipient (TAA recipient) who receives a Trade Readjustment Allowance (TRA) or Unemployment Insurance (UI) in lieu of TRA while otherwise eligible for TRA. TAA recipients also must meet eligibility deadlines for enrollment in TAA-approved training or receive a written waiver to maintain HCTC eligibility. The HCTC is also available to Reemployment and Alternative TAA recipients.

If you belong to one of these groups, then you meet the candidate requirements. You will receive an HCTC Eligibility Certificate in the mail once the HCTC Program is notified by your state workforce agency or the PBGC that you are a candidate for the tax credit.

General Requirements

You meet the general requirements for the HCTC if the following statements are true for every month that you want to receive the tax credit:

• You are covered by a qualified plan for which you pay more than 50% of the premiums
• You are not enrolled in Medicare Part A, B, or C
• You are not enrolled in Medicaid, or the Children's Health Insurance Program (CHIP)
• You are not enrolled in Federal Employees Health Benefits Program (FEHBP) or eligible to receive benefits under the U.S. military health system (TRICARE).
• You are not in prison under federal, state, or local authority
• You are not receiving a 65% COBRA Premium Reduction
• You cannot be claimed as a dependent on someone else's federal income tax return

Eligibility for Your Family Members

Your family members also can receive the tax credit if they meet the same general requirements and are your spouse or can be claimed as a dependent* on your federal income tax return. Your family members also must have either the same qualified health plan as you or a separate qualified health plan.

According to the IRS tax code, there are two types of dependents:

• Qualified Child
• Qualified Relative

To find out more information about dependents, view the IRS Dependent Tax Tutorial.

*Even if you cannot claim your child as a dependent on your federal income tax return, he or she may be eligible for the HCTC if both of the following apply:

• You were the child's custodial parent- the parent with whom the child lived for the greater part of the year (6 months or more)
• The child's other parent can claim the child as a dependent under the rules for children of divorced or separated parents

If both of the above apply, the child may be eligible if the child's other parent does not treat the child as a qualifying family member for the HCTC. The child must also meet all of the other general eligibility requirements to be eligible for the HCTC.

Qualified Health Plan Requirements

To receive the HCTC, you must be enrolled in a qualified health plan. See the information below to see if you already have a qualified health plan, or if you can get qualified health insurance.

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) who want to receive the HCTC, they also must 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) VEBA (Voluntary Employees' Beneficiary Association)

VEBAs may be established through a bankruptcy court to provide a health plan in lieu of COBRA and retiree benefits, but not all VEBAs qualify for the HCTC. If you are unsure if your VEBA qualifies, please contact the HCTC Customer Contact Center at 1-866-628-HCTC (4282) for assistance.  There are several different ways that a VEBA can be created, but will vary depending on your needs.

Read more about the different types of VEBAs that Cone Insurance can help you to establish.

2) COBRA (Consolidated Omnibus Budget Reconciliation Act.

COBRA is federal legislation that requires your former employer to continue offering job-based health coverage to you if you lose your job or run into other qualifying events that cause you to lose your health insurance.

• If you pay more than 50% of the cost for COBRA, you can receive the HCTC
• If you pay 50% or less of the cost for COBRA, you cannot receive the HCTC

• If you and your spouse pay more than 50% of the cost of the spousal coverage, you can receive the HCTC
• If you and your spouse pay 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 income tax return.

5) 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 TAA benefits. Because of this 30-day requirement, non-group/individual coverage is rare for the HCTC.