Information on The Federal Health Coverage Tax Credit

The Federal Health Coverage Tax Credit (HCTC)

A federal income tax credit is available to help certain trade dislocated workers and early retirees, and their dependents, buy qualified health insurance coverage. The Health Coverage Tax Credit (HCTC) covers 65% of the insurance premium for qualified coverage. Under this program, you can either claim the tax credit at the end of the year on your tax return or you can elect to have the money paid directly to your qualified health plan each month by the Internal Revenue Service.

When Am I Eligible For The HCTC?

• To be eligible for the tax credit, you must be receiving Trade Adjustment Assistance (TAA) benefits
• In addition, you must meet other requirements. Specifically, you are not eligible for the HCTC if any of the following apply to you:
  • You have a health plan maintained by an employer or former employer that pays at least 50% of the cost of your coverage. Any share of your premium that is paid by you or your spouse on a pre-tax basis is considered to have been paid by your employer and must be included as such when determining the percentage of employer coverage.
  • You are enrolled in Medicare (Part A or B).
  • You are enrolled in the Federal Employees Health Benefits Program (FEHBP), Medicaid, or State Children's Health Insurance Program (SCHIP).
  • You are entitled to health coverage through the U.S. military health system (Tricare/CHAMPUS).
  • You can be claimed as a dependent on someone else's federal tax return.
  • You received a lump sum payment of your entire PBGC benefit before August 6, 2002.
  • As of the first day of the current month in which you are otherwise eligible, you are imprisoned under a federal, state or local authority.
• HCTC may apply to your family, too. If you are eligible, you can use the credit to help purchase qualified heal