May 4, 2020
by Tricia Barrentine Guay
More than 262 million Americans access medical care through a private plan, either provided by an employer or through Exchanges, Medicaid and Medicare Advantage managed by carriers. ACHP has proposed several novel approaches to ensuring access to care, maintaining continuity of coverage and stabilizing the health insurance market in the face of this unprecedented public health emergency. Using the Health Coverage Tax Credit program to help the newly unemployed pay for continuation of existing coverage is one piece of the puzzle to address access, continuity of coverage and market stabilization issues created by the COVID-19 emergency.
Expand the Health Coverage Tax Credit
To encourage continuity of coverage and care, ACHP recommends Congress expand the existing Health Coverage Tax Credit (HCTC) program to include individuals dislocated (or displaced) from employer sponsored coverage due to the coronavirus.
By broadening eligibility for the HCTC, Congress can limit disruption in health care coverage and provide more subsidy options for individuals affected by the current health pandemic. Opening this established, bipartisan program will offer additional coverage options for a new class of workers that desperately needs them during this time of uncertainty.
In 2002, Congress passed a bipartisan tax credit mechanism to support (1) workers dislocated from their employer sponsored coverage due to trade agreements who were receiving Trade Adjustment Assistance benefits; and (2) workers between the ages of 55 and 64 whose health coverage was taken over by the Pension Benefit Guarantee Corporation.
The HCTC has maintained bipartisan support in subsequent reauthorizations since 2002.
How Expanding HCTC Works
Under current law, the credit covers 72.5 percent of the premium for certain types of health insurance purchased by an eligible taxpayer. The individual is responsible for covering the remaining premium. Eligible taxpayers may use the HCTC toward the purchase of certain qualified health insurance, including COBRA, a group health plan available through a spouse’s employer, individual health insurance, coverage through voluntary employee benefit associations, or certain state-based coverage options. The tax credit is refundable, so taxpayers may claim the full credit amount even if they have little or no federal income tax liability. The credit also is advanceable, so taxpayers may receive it on a monthly basis to coincide with the payment of premiums.
Other tax credits do not impact eligibility for the HCTC, with one key exception: a taxpayer who receives the HCTC is not eligible for the premium tax credit established under the ACA.
The HCTC program is an established mechanism for people to keep their existing health coverage and can easily be extended to individuals affected by this public health crisis.