Health tax credit after 2009 Recovery Act expansions expired

UIPL12-11acc.pdf (https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2011/UIPL12-11acc.pdf)

                                                           CLASSIFICATION
   EMPLOYMENT AND TRAINING ADMINISTRATION                  UI – TRA/HCTC
               ADVISORY SYSTEM                             CORRESPONDENCE SYMBOL
                                                           OUI/DUIO
          U.S. DEPARTMENT OF LABOR
                                                           DATE
             Washington, D.C. 20210                        March 15, 2011



ADVISORY:         UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 12-11

TO:               STATE WORKFORCE AGENCIES

FROM:             JANE OATES /s/
                  Assistant Secretary

SUBJECT:          Health Coverage Tax Credit (HCTC) for Eligible Trade Adjustment
                  Assistance (TAA) Recipients - Expiration of the American Recovery
                  and Reinvestment Act of 2009 Provisions Expanding HCTC

1. Purpose. To advise State Workforce Agencies of their responsibilities under the
HCTC program after the expiration of the provisions of the American Recovery and
Reinvestment Act of 2009 (Recovery Act) that temporarily expanded the HCTC.

2. References. The Omnibus Trade Act of 2010 (Public Law (P.L.) No. 111-344,
enacted December 29, 2010); Sections 1899A, 1899B, 1899C of Division B of the
American Recovery and Reinvestment Act of 2009 (P.L. No. 111-5, enacted
February 17, 2009); the Trade Adjustment Assistance Reform Act of 2002 (P.L. No. 107-
210); Section 35 of the Internal Revenue Code (IRC) of 1986, (26 U.S.C. 35); Training
and Employment Guidance Letter (TEGL) No. 22-08; TEGL No. 11-02, and Changes 1,
2, and 3; TEGL No. 16-10 and Changes 1 and 2; Unemployment Insurance Program
Letter (UIPL) No. 02-03; UIPL No. 05-03; UIPL No. 33-03; UIPL No. 21-09.

3. Background. The Trade Adjustment Assistance Reform Act of 2002 (Trade Act)
created a Federal income tax credit, the HCTC, administered by the Internal Revenue
Service (IRS), which subsidizes private health insurance coverage for individuals in the
TAA program identified as “eligible TAA recipients” and “eligible alternative TAA
(ATAA) recipients.” (See UIPL Nos. 02-03, 05-03, and 33-03.) An “eligible TAA
recipient” was defined as an individual who receives Trade Readjustment Allowances
(TRA) for any day of a month (and the next month following the last month the
individual meets this definition) or who would be eligible to receive TRA, but for the fact
that s/he has not exhausted his or her unemployment compensation (UC) entitlement.
(See TEGL No. 11-02, paragraph D.4., Limitations on TRA for an explanation of the
“period for receiving TRA” and TEGL 11-02, paragraphs D.2., and D.3., and TEGL No.
11-02, Change 3 for an explanation of the training requirements in effect for workers
covered under certifications of petitions filed before May 18, 2009, the date the HCTC
provisions of the Recovery Act were effective). An “eligible alternative TAA (ATAA)
recipient” was defined as an individual who is a worker under section 246(a)(3)(B) of

 RESCISSIONS                                              EXPIRATION DATE
 UIPL 21-09                                               none

the Trade Act and who is participating in the program established under paragraph (a)(1)
of that section for a month and is receiving a benefit for that month under paragraph
(a)(2) of that section.

The Recovery Act amended the IRC by adding a new provision to improve the
affordability of the HCTC by raising the tax credit to 80 percent (up from 65 percent) of
health insurance premiums beginning May 2009, through December 2010. It also
established another category of individuals potentially eligible for the HCTC under
section 246, as amended by the Recovery Act, referred to as “eligible reemployment
TAA (RTAA) recipients.”

The Recovery Act also provided a Special Rule to amend the definition of an “eligible
TAA recipient” for purposes of the HCTC. The Special Rule allowed coverage for an
individual who:

      Is in a break in approved training that exceeds 30 days, and the break falls within
       the period for receiving Trade Readjustment Allowances (TRA) provided under
       the Trade Act, or

      Is receiving Unemployment Compensation (UC), which includes regular UC,
       Extended Benefits (EB), and Emergency Unemployment Compensation (EUC),
       for any day of such month and who would be eligible to receive TRA (except that
       s/he has not exhausted UC) for such month, without regard to the enrollment in
       training requirements.

The Omnibus Trade Act of 2010 extended the effective dates of the Recovery Act
amendments to the HCTC provisions of the IRC through February 12, 2011.

4. Summary of the Changes to the HCTC Beginning March 2011 and the Definition
of “Eligible TAA Recipient” after February 12, 2011.

      The expanded (80 percent) coverage under the Recovery Act expired on
       February 12, 2011. The amount of the tax credit reverted to 65 percent of the
       premiums paid for qualified health insurance for all eligible individuals (TAA
       recipients, ATAA recipients, and RTAA recipients), for months beginning with
       March, 2011.

      The amended definition of an “eligible TAA recipient,” under the Recovery Act’s
       Special Rule, is no longer in effect. An “eligible TAA recipient” is again defined
       as an individual who receives TRA for any day of a month (including the month
       following the last month the individual meets this definition) or who would
       receive TRA except for the fact that s/he has not exhausted his/her UC
       entitlement.

5. Guidance to the States. States should continue to prepare the monthly records of all
“eligible TAA (or ATAA/RTAA) recipients” for submission to the IRS. The records of


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“eligible TAA recipients” include all individuals, regardless of the petition number
identified with the certification under which the individual is covered. Beginning with
March 2011, states must use the definition of an “eligible TAA recipient” that was in
effect before the amended definition under the Recovery Act.

States should note that an individual reported as an “eligible TAA recipient” under the
Recovery Act requirements for HCTC may continue to be reported as an “eligible TAA
recipient,” if the individual meets the requirements of the narrower definition described
above. However, if such an individual is an “eligible TAA recipient” because of the
Special Rule or another Recovery Act provision which is no longer in effect, then he or
she may no longer be an “eligible TAA recipient” under the definition applicable for
months beginning with March 2011 (regardless of the petition number identified with the
certification under which the individual is covered).

6. HCTC Data Transmissions. States must continue to transmit records of eligible
TAA (or ATAA/RTAA) recipients to the IRS via the UC Interstate Connection (ICON)
network. There are no changes regarding these data transmissions. The IRS uses this
information to determine whether the eligible TAA (or ATAA/RTAA) recipients are
eligible for HCTC.

7. Administrative Costs. National Emergency Grant (NEG) funds are available to
cover administrative costs for HCTC-related activities described in this UIPL. States
should submit requests for funding according to the application procedures for NEG
funds as specified in TEGL No. 10-02.

8. Action Requested. State Administrators are requested to provide this information to
appropriate staff.

9. Inquiries. Please direct all inquiries to the appropriate Regional Office.




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