Substantial Flaws in Trade Health Insurance Tax Credit Need To Be Addressed Before Consideration of an Expansion

Publication Date: March 2004

Publisher: Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): Edwin Park

Research Area: Health

Keywords: Health care costs; Economic inequality; Job displacement

Type: Report

Abstract:

In 2002, as part of trade legislation, Congress established a refundable tax credit for the purchase of certain types of health insurance coverage by workers who have lost their jobs due to trade and who qualify for Trade Adjustment Assistance (TAA). Individuals who receive assistance through the Pension Benefit Guaranty Corporation also are eligible for this health insurance tax credit.

Under the TAA health insurance tax credit, also known as the Health Coverage Tax Credit (HCTC), eligible individuals can use the credit primarily to purchase health insurance through their former employer. (This is known as “COBRA coverage.”) They also may use the tax credit to purchase various forms of state-sponsored health insurance if their state has elected to offer such coverage.