William T. Wilson, Esquire

Health insurance continuation coverage is available for those who lose their jobs due to foreign competition

For those who have recently lost their jobs due to pressure from foreign competition, there is help available. On August 6, 2002, President Bush signed trade legislation that includes a subsidy for health insurance continuation coverage for employees terminated as a result of foreign competition.

Under the COBRA continuation coverage provisions of the Employee Retirement Income Security Act (ERISA), employees can continue their health insurance coverage after termination, but they must pay the premiums themselves. Although the premium is limited to 102 percent of the premium payment under the employer's group plan for a period of eighteen months or longer, the expense is often prohibitive for those who have experienced a reduction in income.

Federal Health Coverage Tax Credit (HCTC) Program
With the 2002 Federal Health Coverage Tax Credit (HCTC) program, former employees can obtain a tax credit for part of their health insurance premiums.

There are two eligible groups for HCTC:
1) Trade Impacted Workers: Trade Impacted Workers are individuals
certified to receive certain Trade Adjustment Assistance (TAA) and
Alternative TAA benefits because they have lost their jobs due to the
effects of international trade.

2) Pension Benefit Guaranty Corporation (PBGC) Recipients:
PBGC Recipients are individuals receiving PBGC pension benefit payments
who are 55 years of age or older. This includes individuals receiving
benefits from the PBGC as a survivor or beneficiary of a PBGC recipient.
Those receiving a portion of an ex-spouse's benefit from the PBGC
can also qualify.

This program provides two benefit options. Eligible workers may claim a tax credit on their Federal income tax return of 65% of their monthly insurance premiums paid during the year. Alternatively, as of August 2003, eligible workers may claim an advance credit. Under this option the worker would pay 35% of their monthly insurance premium and the Federal government would pay the remaining 65% of the premium each month. The tax credit may cover your spouse and dependents, and you may claim the credit even if you do not owe Federal income tax. Eligible individuals must enroll in a qualified health plan to claim the HCTC.

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