Optimus Template

Here’s what you need to know about the Health Coverage Tax Credit

The Health Coverage Tax Credit began as a groundbreaking tax credit program in 2002 and was expanded by the American Recovery and Reinvestment Act in February 2009. Described by some participants as “a lifesaver,” the HCTC is a federally funded tax credit that currently pays 80 percent of a qualified individual’s health insurance premium.

Nationwide, thousands of trade-affected workers and Pension Benefit Guaranty Corporation recipients are eligible for the program. Trade-affected individuals are certified by the U.S. Department of Labor and have registered at their local unemployment office to receive benefits under the Trade Adjustment Assistance for Workers Program. PBGC recipients currently draw a benefit from the PBGC and are between the ages of 55 and 65.

How to receive the HCTC
Individuals who are eligible for the program receive HCTC registration materials in the mail. As part of the registration process, an individual must enroll - or already be enrolled - in a qualified health insurance plan. The most common types of qualified health insurance for the HCTC are COBRA (health insurance provided by a former employer), coverage offered through a spouse's employer or coverage through a state-qualified health plan, (Please note that Blue Cross Blue Shield of Michigan is the only state-qualified health plan in Michigan.)

Eligible individuals can receive the tax credit on a monthly or yearly basis, Those who enroll in the monthly program pay 20 percent of their health plan premium each month and the HCTC program pays the remaining 80 percent, making monthly health insurance costs more affordable.

With the yearly HCTC, individuals pay the full amount of their premiums each month and then receive the 80 percent credit as a refund or to be used against taxes they owe after filing their yearly federal tax returns.

Changes to the HCTC
The American Recovery and Reinvestment Act, commonly referred to as the stimulus bill, changed the HCTC to make health coverage more affordable and available to an even larger population. Enhancements include:

• A credit increase from 65 to 80 percent of qualified health insurance premiums
• Extended COBRA coverage
• Eased training requirements that allow more
• Participants to continue receiving the HCTC 
• Reimbursement for premiums paid while enrolling
• Extended coverage for qualified family members

Partnering to help

The HCTC program is delivered through a collaborative partnership among state and local governments, federal agencies and private industry, the shared objective among these parties is to make health insurance more affordable to individuals in need of relief.

Want more information?
To learn more about who is eligible for the HCTC program and the requirements to register for the HCTC, go to irs.gov (keyword: HCTC)*.
*Blue Cross Blue Shield of Michigan and Blue Care Network do not control this Web site nor endorse its general content.