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Thursday, August 28, 2008 |  |
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Trade Adjustment Act of 2002
In August of 2002, President Bush signed the Trade Adjustment Assistance Act of 2002, that provides a refundable tax credit to help eligible individuals purchase health insurance from a number of different sources.
The Trade Adjustment Assistance programs were set to expire on September 30, 2007.However, P.L. 110-161, signed by President George Bush on December 26, 2007, fully funds TAA programs through September 30, 2008. The Department of Labor has indicated that this is sufficient to continue the programs through the end of the fiscal year, including issuing new certifications of eligible workers.
Click here to view NAHU Recommendations for Strengthening and Enhancing the Health Coverage Tax Credit under TAA. The following are automatically allowed as purchasing options:
- COBRA
- Coverage through the group health plan of the individual's spouse
- Individual coverage if in force at least 30 days prior to separation of employment
- State-based continuation coverage
- Coverage through a high-risk pool
- Coverage through a state employee health insurance program
- Coverage through a program comparable to the state employee health insurance program
- Coverage arranged between a state and a group health plan, an issuer of health insurance coverage, an administrator, or an employer
- Coverage through a private purchasing pool
- Coverage through a state operated health plan that does not receive federal financial participation
Although the items in bold print are automatic options, a state does not have to include all of the italicized options unless they elect to do so.
The TAA tax credit does not require that a person be previously insured in order to qualify for the tax credit, however, individuals without prior coverage would be subject to the same pre-existing conditions limitations as participants in the type of purchasing option the state selected. If a TAA eligible individual has been previously insured for three months and has less than a 63-day break in coverage, the option selected must extend coverage without application of a pre-existing conditions waiting period.
These new provisions will require state legislative or regulatory changes in many states. Therefore, coverage under TAA other than COBRA, coverage under a spouse's employer-sponsored plan, or existing individual health insurance coverage may not necessarily be immediately available options, or a state may choose not to offer them at all. Even with options of a type that may already be in existence in the state, modifications may need to be made to existing laws and regulations to allow the waiver of the pre-existing conditions waiting period for those with three months of prior coverage. Some states have already implemented qualified health plans for use with the TAA tax credit. Note: Many states have qualified their state high risk pool as a purchasing option for the tax credit.
Additional Information
- IRS 2005-50 released June 16, 2005 provides Q&A to clarify when eligible individuals can claim a health coverage tax credit including those covered by PBGC.
- Tax Credit Provisions of the Trade Adjustment Assistance Act - National Association of Health Underwriters Powepoint Presentation - April 2004
- Treasury Department's TAA Site
For questions on this issue, please contact the Government Relations Department.
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