Tax Info

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ATAA - Alternative Trade Adjustment Assistance () - ATAA recipients are:
- at least 50 years old,
- have lost a job at a trade-affected company,
- have another job where they make less money, and
- get a wage supplement from their state to make up for their lower income.
The ATAA benefit is a wage subsidy designed for workers with hard-to-transfer skills. To be eligible for this Department of Labor program, workers must meet certain eligibility criteria.
Note: if you register for the tax credit when you’re only receiving TAA benefits and then you start receiving ATAA benefits, you must re-register and requalify for the HCTC at that time. All ATAA participants must call the HCTC Customer Contact Center to register for the HCTC.
Break In Coverage - a period of time when an individual has no creditable health coverage. A qualified health plan may require a HCTC candidate to have three months of creditable coverage before enrolling in the health plan. However, a HCTC candidate may have a possible break in coverage of up to 62 days. If the break in coverage is more than 62 days, then the plan can impose preexisting condition exclusions. A health plan administrator can, however, waive these exclusions.
COBRA - Consolidated Omnibus Budget Reconciliation Act of 1985. COBRA is federal legislation that lets you extend your job based health coverage if you lose your job or run into other qualifying events that cause you to lose your health insurance. The HCTC can pay for COBRA health insurance expenses if the eligible person pays for more than 50% of the cost of coverage.
Creditable Coverage - for the purposes of the HCTC, creditable coverage includes:
A group health plan (including COBRA, Temporary Continuation of Coverage (TCC), or State continuation coverage)
Health insurance coverage (including individual coverage, college or school insurance, or short-term limited duration insurance)

A qualified health plan may require a HCTC candidate to have three months of creditable coverage before enrolling in the health plan. However, a HCTC candidate may have a possible break in coverage of up to 62 days. If the break in coverage is more than 62 days, then the plan can impose preexisting condition exclusions. A health plan administrator can, however, waive these exclusions.

E -
Eligible Individual (for the HCTC) - in general, the following individuals are potentially eligible for the HCTC: eligible TAA benefit recipients, eligible ATAA benefit recipients or eligible PBGC pension benefit payment recipients who are at least 55 years old and not covered by Medicare. Eligible individuals must meet all HCTC eligibility requirements, such as having qualified health coverage, not having disqualifying coverage, not being imprisoned, and not being able to be claimed as a dependent on anyone’s tax return.
Group Plan - health coverage sponsored by an employer or employee organization (such as a union) for employees and their eligible dependents. Group plans are generally not qualified plans for the HCTC.
Guaranteed Issue - guaranteed enrollment for qualifying individuals to an HCTC state-qualified health plan regardless of their medical status. Qualifying individuals must be permitted to remain enrolled so long as they pay the premium. In order to be considered a qualifying individual, the individual must:
Have had at least 3 months of continuous creditable coverage prior to becoming eligible for the HCTC.
Not have had a break in coverage of over 62 days immediately preceding the time that the individual applies for enrollment with the health plan.
Health Coverage Tax Credit (HCTC) - created by the Trade Act of 2002 and administered by the Internal Revenue Service (IRS), the HCTC is an important benefit that pays 65% of a qualified health plan premium for eligible individuals. The HCTC is a unique tax credit that individuals can receive either monthly as their premiums become due, or yearly on their federal tax return. The HCTC is not a government health insurance program; it is a federal tax credit. You may be eligible to claim the credit even if you do not owe any federal income tax.
Health Plan Administrator (HPA) - an entity that provides or pays the cost of medical care. A HPA can include an insurance company, insurance service, or insurance organization (including an HMO) that is licensed to engage in the business of insurance in a state and is subject to state law that regulates insurance.
Health Plan Policyholder - a health plan policyholder is typically the individual who subscribes to the health insurance benefit. The other individuals covered under the policy are the policyholder's dependents. The HCTC-eligible individual does not have to be the policyholder of a qualified plan.
High Risk Pool - subsidized health insurance pools that are organized by some states. High risk pools offer health insurance to individuals who have been denied health insurance because of a medical condition or to individuals whose premiums are rated significantly higher than average due to health status or claims experience. High risk pools can be a form of qualified health coverage for the HCTC if they are deemed state-qualified. To be considered qualified, the high risk pool must provide coverage to all individuals guaranteed coverage through HIPAA, not impose any preexisting condition exclusions, meet certain requirements for premium rates and covered benefits, and be officially qualified by the state.
HIPAA - the Health Insurance Portability and Accountability Act. This is a federal health benefits law passed in 1996, effective July 1, 1997, which among other things, restricts pre-existing condition exclusion periods to ensure portability of health care coverage between plans, group and individual; requires guaranteed issue and renewal of insurance coverage; and prohibits plans from charging individuals higher premiums, co-payments, and/or deductibles based on health status. The legislation includes a privacy rule creating national standards to protect personal health information.
IRS Form 8885 - Health Coverage Tax Credit; individuals eligible for the tax credit must complete and submit IRS Form 8885 with their federal tax return in order to claim the yearly HCTC for months they were eligible but did not receive the monthly HCTC. The instructions for IRS Form 8885 provide guidance as to who may claim the HCTC.
IRS Form 1099-H - Health Coverage Tax Credit (HCTC) Advance Payments; IRS Form 1099-H provides the amount of monthly HCTC, and the months to which, the HCTC Program paid a health plan on an individual's behalf during the calendar year.
Monthly HCTC Program - a payment plan through which the HCTC Program pays the 65% portion of an individual's eligible monthly health plan premium as it becomes due. Eligible individuals must register to receive the monthly credit by completing the HCTC Registration Form.
National Emergency Grant (NEG) Bridge/Gap-filler Funds - also called temporary state-level assistance for the HCTC, these are federal grants available to states to assist eligible TAA/ATAA and PBGC recipients by paying 65% of their eligible health plan premiums while individuals are registering for the monthly HCTC. Once individuals receive their first invoice for the HCTC, they should no longer receive NEG funds from the state. States apply to the Department of Labor for these grants and then individuals apply to the state to receive the available funds.
Non-discriminatory premium - this term means that your health plan may not charge you, as a HCTC participant, a higher premium than a customer who is not a HCTC participant. Complaints about how premiums are set should be referred to your state's Department of Insurance.
Non-group/Individual Health Plan - non-group/individual health insurance is an individual policy for a single person or family. This coverage is usually provided under a contract purchased through an insurance company, agent or broker. In order to have the HCTC cover this type of coverage, the non-group/individual plan must have started at least 30 days before the person left the job that made him or her eligible for TAA, ATAA, or PBGC benefits.
Pension Benefit Guaranty Corporation (PBGC) - PBGC recipients:
- are retired, and
- are receiving PBGC pension payments.
The PBGC insures the pension benefits of workers in some private sector industries. When an employer faces severe financial difficulty, such as bankruptcy, and can’t continue paying pensions to their retirees, the employer may request the PBGC to take over the responsibility for paying pension benefits to their retirees. The PBGC decides if it will assume responsibility for the pension plan, which is also known as the PBGC becoming the “trustee” of the pension plan. If the PBGC becomes the trustee of the pension plan, then the PBGC will pay pension benefits under the terms of the plan, subject to legal limits, to plan participants and beneficiaries. PBGC pension benefit recipients can receive their pension benefit as a monthly payment or as a one-time lump sum.
Note: PBGC pension benefit recipients become potentially eligible for the HCTC on the day the PBGC becomes the trustee of their pension plan, even if they do not receive this Program Kit for a few months after that. This means that if the PBGC became the trustee of your pension plan on January 31, and you were enrolled in a qualified health plan, then you could file for the HCTC on your federal tax return starting in January.
PBGC Alternate Payees - PBGC Alternate Payees can be spouses, former spouses, custodial parents of eligible children or other dependents. They are required to submit proof, such as a marriage license, a birth certificate, a baptismal certificate, a death certificate (for a surviving spouse), a divorce decree, a qualified domestic relations order, etc., to the PBGC before the PBGC will start paying benefits.
Plan - a person’s specific health benefits package or the organization that provides such a package. It may be a HMO, a PPO, a commercial insurance carrier or a company that self-insures.
Preexisting Condition Exclusion - any physical or mental condition that an individual has before health coverage begins. The cause of the condition does not matter and could be the result of an accident or illness. During a preexisting condition exclusion period, a group health plan will not pay for treatment related to a preexisting condition. However, the health plan must pay for any unrelated treatments or conditions that the plan covers. Once the exclusion period is over, the health plan must pay for all covered services, including the ones for the preexisting condition.
Premium - the amount an individual pays in exchange for health coverage. An individual’s employer sometimes pays a portion of this amount.
Qualified Domestic Relations Order - relates only to pensions. The PBGC reviews a submitted domestic relations order to determine whether the order is qualified before paying benefits to an alternate payee. The benefits of a pension plan participant generally may not be assigned to another person. The law provides an exception for QDROs that relate to child support, alimony payments, or marital property rights of an alternate payee (spouse, former spouse, child, or other dependent of a plan participant). The exception applies only if the domestic relations order meets specific legal requirements that make it qualified.
Qualified Family Member - qualified family members are a HCTC-eligible individual’s spouse and dependent(s) that can be claimed on the individual’s federal tax return. Children of divorced or separated parents are treated as dependents of the custodial parent for the purposes of the HCTC. The non-custodial parent may not claim the credit even if she or he is entitled to claim the tax exemption for the child or carries the child’s health insurance. Family members are not eligible for the HCTC if they are:
1. Not enrolled in a qualified plan, either the same plan as the HCTC-eligible individual or on a separate qualified plan.
2. Entitled to Medicare Part A or enrolled in Medicare Part B.
3. Enrolled in the Federal Employees Health Benefits Program (FEHBP), Medicaid, or State Children’s Health Insurance Program (SCHIP).
4. Entitled to health coverage through the military health system (TRICARE/CHAMPUS). This does not include health coverage received as a Veterans Affairs (VA) benefit.
Qualified Health Plan - eligible individuals must be enrolled in qualified health coverage in order to claim the HCTC. The following types of health plans are qualified for purposes of the HCTC Program:
2. State-qualified health plan
3. Spousal coverage
4. Non-group/individual health plan
Rapid Response Teams - administered by the U.S. Department of Labor, Rapid Response Teams provide information to workers who are being laid off in large groups (more than 50 workers) or to workers who work at a facility where the employer has announced that a plant or facility is closing. Rapid Response programs exist in every state. It may be a team, a unit or any other such division.
Spousal Coverage - if an eligible individual’s spouse has employer-sponsored coverage, and the spouse pays more than 50% of the cost with after-tax dollars, it is considered one of the qualified health plans for the HCTC. If the spouse’s coverage is COBRA, the individual has the option to enroll in the monthly HCTC; if it is not COBRA, the individual can only claim the yearly HCTC when filing his or her federal tax return.
State-Qualified Health Plan (SQHP) - state-qualified health plans are plans that a state’s Department of Insurance (DOI) approves as meeting the requirements of the Trade Act of 2002. For a state’s DOI to qualify a plan, the plan must have:
- No preexisting condition exclusion
- Guaranteed Issue
- Non-discriminatory premium
- Benefits must be the same (or substantially the same) under coverage provided to similarly situated individuals who are not eligible for the HCTC
State Workforce Agency (SWA) - this is an inclusive term the HCTC Program uses to describe various state agencies that handle unemployment benefits and TAA programs within their state. They may be referred to in the state as the state Workforce Commission, the Department of Unemployment Benefits, or a local SWA/State Employment Office.
Trade Adjustment Assistance (TAA) - TAA recipients:
- receive money from their state (either unemployment insurance or Trade Readjustment Allowance [TRA]), and
- meet training requirements.
TAA is a benefit for individuals who have lost their jobs because of trade with foreign countries. Employers and unions file a petition with the Department of Labor to have their employees TAA certified. TAA offers an income supplement (called TRA), assistance in skill assessment, job search workshops, job development or referral, and job placement. In addition, workers may be eligible for training, job search allowance, relocation allowance, and other reemployment services.
Trade Adjustment Assistance Reform Act of 2002 - or the Trade Act of 2002, the legislation that created the HCTC.
Trade Readjustment Allowance (TRA) - Trade Adjustment Assistance recipients receive TRA as income support while they participate in full-time training. TAA recipients can also receive TRA when they have a waiver from training because the training is either not appropriate or not available. Recipients start receiving TRA after they use up their initial 26 weeks of unemployment insurance. They can continue to receive TRA for up to 26 weeks, with an additional 26 weeks if they take remedial educational classes as part of their training plan.
Trusteed - when the PBGC has “trusteed” a plan, it means that the PBGC and the plan’s administrator have signed a legal document called a Trusteeship Agreement, which states the PBGC will assume responsibility for paying the pension benefits due to employees under the terms of the plan. The PBGC also takes possession of any assets owned by the plan.
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