On October 21, 2011, President Obama signed into law retroactively reinstating and extending through the end of 2013 the Health Coverage Tax Credit (HCTC), which is part of the Trade Adjustment Assistance Program.
The HCTC is a federally funded program administered by the IRS that benefits workers who have lost their jobs or earn lower pay due to foreign trade and retirees whose pension plans have been taken over by the Pension Benefit Guaranty Corporation (PBGC). It is designed to reduce the cost of health insurance for eligible individuals and their families by offsetting a portion of qualified health insurance premiums, including COBRA. Eligible individuals cannot be enrolled in certain other health coverage benefits such as Medicare or Medicaid.
The new legislation increases the amount of the tax credit from 65% to 72.5% for coverage months after February 12, 2011. In addition, this measure expands the population eligible to take advantage of the HCTC. For example, under certain circumstances, the HCTC will remain available to family members of participants who lose eligibility (i.e. enroll in Medicare, pass away or finalize a divorce).