The Health Coverage Tax Credit
What is the Health Coverage Tax Credit (HCTC)?
The HCTC is a new federal tax credit program established to help eligible individuals 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 an increasing number of eligible Texas individuals and their family members 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. The Texas Department of Insurance 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 80 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:
- The individual must be unemployed or in danger of becoming unemployed as a result of the effects of international trade and:
- receive a Trade Readjustment Allowance (TRA); or
- be eligible to receive a TRA, but is still receiving unemployment Insurance (UI) benefits.
- The individual must be unemployed or in danger of becoming unemployed as a result of the effects of international trade and receive Alternative Trade Adjustment Assistance (ATAA) benefits.
- The individual must be at least 55 years old and receiving pension benefits from the Pension Benefit Guaranty Corporation (PBGC) as:
- a PBGC participant;
- a beneficiary or survivor of a PBGC participant; or
- an alternate payee of an ex-spouse´s benefit.
- The individual must be at least 65 years old, receiving pension benefits from the PBGC, and not be eligible to receive Medicare Part A.
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.
- Plans that are automatically qualified include:
- COBRA continuation coverage;
- Coverage through a spouse´s health plan provided the spouse´s employer pays for less than 50% of the premium (This type of coverage currently does not qualify for the monthly advance tax credit. It may only be claimed on your 2003 federal tax return.); or
- Coverage through an individual (non-group) health plan that began at least 30 days prior to separation from employment.
- Plans that are state-qualified in Texas must:
- Comply with Texas laws and regulations;
- meet certain conditions set by federal law; and
- be qualified by the Texas Department of Insurance.
You may obtain a listing of qualified plans organized by state by contacting the HCTC Customer Contact Center at 1-866-628-4282 or via their website at www.irs.gov (enter their keyword: HCTC).
You may obtain a listing of qualified plans in Texas by contacting the Texas Department of Insurance at 1-800-578-4677.
Who is not eligible for the HCTC?
An individual is not eligible for the HCTC, if the individual is:
- Entitled to Medicare Part A or enrolled in Medicare Part B;
- Enrolled in a state´s Medicaid program or State Children´s Health Insurance Program (SCHIP);
- Enrolled in any health plan maintained by an employer, former employer, or spouse´s employer that pays at least 50% of the cost of coverage or the cost of coverage is paid with pre-taxed dollars;
- Enrolled in a plan in the Federal Employees´ Health Benefit Program (FEHBP);
- Entitled in a Department of Defense health plan (Tricare/CHAMPUS); or
- Imprisoned - whether in a local, state, or federal facility.
Alternate Resources
The following is a list of resources that you may contact for additional information:
For an overview of the HCTC, or to obtain a pdf version of the HCTC program kit
Contact the Internal Revenue Service
www.irs.gov (enter their Keyword: 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: 7:00 AM to 7:00 PM 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
Contact the Pension Benefit Guaranty Corporation at:
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 the Texas Department of Insurance Life / Health Division at:
1-512-322-3409 Or via e-mail at
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 8AM - 5 PM)
1-800-735-2988 (TTD/TTY Customer Service 8 AM - 5 PM)
Website: www.txhealthpool.org/index.html
- BlueCross BlueShield of Texas
1-800-531-4456 (New Customers)
1-800-521-2227 (Customer Service for Current Customers)
Website: 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 6 month state-mandated continuation period, analogous to 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 the Texas Department of Insurance Life / Health Division at 1-512-322-3409, or via e-mail at
These state-qualified plans are in addition to any plans automatically qualified under the HCTC.
For more information contact:
Last updated: 03/19/2010
