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The Health Coverage Tax Credit

What is the Health Coverage Tax Credit (HCTC)?

The HCTC is a federal tax credit program created to help people pay for health care coverage for themselves and qualified family members. Eligible individuals primarily consist of certain groups of displaced workers and pension recipients. The HCTC is expected to help Texans and their families pay for health coverage they might otherwise not be able to afford.

The U.S. Internal Revenue Service administers the program, in partnership with other federal agencies, state governments, and health plan administrators. In Texas, the partnership involves the efforts of two state agencies: the Texas Workforce Commission and the Texas Department of Insurance. The Texas Workforce Commission helps identify people who are eligible and helps promote the program. TDI works together with health plan administrators to make qualified coverage plans available for eligible individuals.

What does HCTC do?

HCTC provides a tax credit that will pay 72.5 percent of the qualified health insurance premiums paid by eligible individuals. An eligible individual may claim the tax credit on the individual´s federal tax return or take the credit as a monthly advance to be paid to the health plan administrator as premiums become due.

Who is eligible for the HCTC?

To be eligible for HCTC, an individual must be included in one of the following groups:

  • A Pension Benefit Guaranty Corporation (PBGC) payee who is 55 years old or older.
  • An eligible Trade Adjustment Assistance (TAA), Alternative TAA (ATAA), or Reemployment TAA (RTAA) recipient.
    An eligible TAA recipient is defined as someone who receives a Trade Readjustment Allowance (TRA) or is in an approved break in training, or receives 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.
  • A qualified family member of an individual who fell under one of the categories listed above at the time of Medicare enrollment, death, or divorce.

Eligible individuals must also meet general requirements to receive the tax credit. Individuals must:

  • be covered by a qualified health plan for which you pay more than 50 percent of the premiums.
  • not be enrolled in Medicare Part A, B, or C or enrolled in Medicare but only claiming premiums for qualified family members.
  • not be enrolled in Medicaid or the Children’s Health Insurance Program (CHIP).
  • not be enrolled in the Federal Employees Health Benefits Program (FEHBP).
  • not be enrolled in the U.S. military health system (TRICARE).
  • not be imprisoned under federal, state, or local authority.

To receive the HCTC, the eligible individual cannot be claimed as a dependent on someone else’s federal income tax return and qualified family members must be the spouse or a dependent on their federal income tax return.

What health coverage qualifies for the HCTC tax credit?

To be qualified health coverage under the HCTC, the health coverage may be automatically qualified or state-qualified.

  1. Plans that are automatically qualified include:
    • COBRA continuation coverage
    • State-qualified health plan; health plans that TDI approves as meeting the Trade Act of 2002’s Consumer Protection requirements for the HCTC.  (See the list of state-qualified health plans below for additional information.)
    • Coverage through a spouse´s health plan provided the spouse´s employer pays for less than 50 percent of the premium (This type of coverage currently does not qualify for the monthly advance tax credit. It may only be claimed on your federal tax return.)
    • Coverage through an individual (non-group) health plan that began at least 30 days prior to separation from employment.
  2. Plans that are state-qualified in Texas must:
    • comply with Texas laws and regulations
    • meet certain conditions set by federal law
    • be qualified by TDI.

You may get a list of qualified plans in Texas by contacting the HCTC Customer Contact Center at 1-866-628-4282 or by visiting its website at www.irs.gov/Individuals/The-Health-Coverage-Tax-Credit-(HCTC)-Program. You may get a list of qualified plans in Texas by calling TDI at 1-800-578-4677.

Alternate Resources

The following is a list of resources that you may contact for additional information:

For an overview of the HCTC or to get a PDF version of the HCTC Eligibility Kit:

Contact the Internal Revenue Service
www.irs.gov/hctc

For eligibility questions or to register for the HCTC program:

Call the HCTC Customer Contact Center at:

1-866-628-4282 (toll free)
1-866-626-4282 (TDD/TTY callers)
Hours of operation: 7 a.m. to 7 p.m., Central time, Monday through Friday

For more information on the Trade Act of 2002, TAA, and ATAA:

Contact the Department of Labor Employment and Training Administration (DOLETA) at:

1-877-872-5627
www.doleta.gov

For more information on the Pension Benefit Guaranty Corporation:

1-800-400-7242
www.pbgc.gov/

For information regarding trade affected worker eligibility, application for TAA benefits, or other matters relating to benefits for unemployed or dislocated workers:

Contact the Texas Workforce Commission at:

1-800-939-6631 (Unemployment Insurance Claims) or 1-888-562-7489 (Dislocated Workers Unit & TAA)
www.texasworkforce.org

For more information on Texas´ state-qualified health plans:

Contact TDI's Life / Health Division at:

1-512-322-3409 Or via e-mail atLifeHealth@tdi.texas.gov    

List of State-Qualified Plans for the Health Coverage Tax Credit

Texas has qualified the following plans for the HCTC:

Texas Health Insurance Pool
1-888-398-3927 (Customer Service from 8 a.m. to 5 p.m.)
1-800-735-2988 (TTD/TTY Customer Service from 8 a.m. to 5 p.m.)
www.txhealthpool.org/index.html

BlueCross BlueShield of Texas
1-800-531-4456 (New Customers)
1-800-521-2227 (Customer Service for Current Customers)
www.bcbstx.com

For written requests for information:

Individual Products
PO Box 833922
Richardson, TX 75080

(Please visit the BlueCross BlueShield Web site - www.bcbstx.com - for more information.)

State-mandated right to continuation of coverage under Texas Insurance Code Article 3.51-6

This option consists of a six-month state-mandated continuation period, like COBRA, which state law requires carriers to offer to persons losing coverage under certain group health benefit plans. For questions about the continuation benefit, you may contact either your group health benefit plan administrator, or TDI's Life / Health Division at 1-512-322-3409, or via e-mail atLifeHealth@tdi.texas.gov

These state-qualified plans are in addition to any plans automatically qualified under the HCTC.


For more information contact:



Last updated: 11/18/2013



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