The Internal Revenue Service had to roll out a manual process last year to provide advance payments on Health Coverage Tax Credits every month to health plan administrators on behalf of displaced workers and retirees, but it mistakenly provided the tax credits for thousands of people who were old enough to qualify for Medicare.
The Health Coverage Tax Credit dates back several years before the Premium Tax Credit in the Affordable Care Act. It was created in 2002 to help workers who have lost their jobs due to foreign trade and who receive benefits through the federal government’s Trade Adjustment Assistance and Alternative Trade Adjustment Assistance programs, along with eligible recipients of pensions paid by the Pension Benefit Guaranty Corporation, which takes over payments for busted pension plans of employers who have gone bankrupt or experienced severe financial difficulties. The HCTC is a refundable tax credit that covers 72.5 percent of the cost of qualified health insurance premiums for eligible individuals and their qualified family members. The tax credit was originally established in the Trade Adjustment Assistance Reform Act of 2002. The HCTC expired at the end of 2013 but was retroactively extended in the Trade Preferences Extension Act of 2015.
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