Health Coverage Tax Credit eligibility for trade assistance recipients

UIPL21-09acc.pdf (https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2009/UIPL21-09acc.pdf)

                                                          CLASSIFICATION
         EMPLOYMENT AND TRAINING                          UI - TRA/HCTC
      ADMINISTRATION ADVISORY SYSTEM                      CORRESPONDENCE SYMBOL
         U.S. DEPARTMENT OF LABOR                         OWS/DUIO
              Washington, D.C. 20210                      DATE
                                                          April 3, 2009

ADVISORY: UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 21-09

TO:            STATE WORKFORCE AGENCIES

FROM:          DOUGLAS F. SMALL /s/
               Deputy Assistant Secretary

SUBJECT:       Health Coverage Tax Credit (HCTC) for Eligible Trade Adjustment Assistance
               (TAA) Recipients

1. Purpose. To advise states of the amended definition of an “eligible TAA recipient” for purposes
   of the HCTC administered by the Internal Revenue Service (IRS).
2. References. Sections 1899A, 1899B, and 1899C of Division B of the American Recovery
   and Reinvestment Act of 2009, Public Law (P.L.) No. 111-5 (the Recovery Act), 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. 10-02, TEGL No.11-02, and Changes 1, 2, and 3;
   Unemployment Insurance Program Letter (UIPL) No. 02-03; UIPL No. 05-03; and UIPL No.
   33-03.
3. Background. The Trade Adjustment Assistance Reform Act of 2002 created a Federal tax
   credit, the HCTC, which subsidizes private health insurance coverage for individuals in the
   TAA program identified as “eligible TAA recipients” and “eligible alternative TAA
   recipients.” (See UIPL Nos. 02-03, 05-03, and 33-03.) Sections 1899A and 1899B of the
   Recovery Act, amended Sections 35(a) and 7527(b) of the IRC of 1986 by adding a new
   section, Section 7527(e), to provide for 80 percent reimbursement of health insurance costs
   beginning May 2009 and through December 2010, and to provide for certain retroactive
   payments. Section 1899C of the Recovery Act amended the definition of an “eligible TAA
   recipient.” This UIPL discusses and provides guidance to states regarding this new
   definition. Operating instructions addressing other changes that the Recovery Act made to
   the TAA program will be issued in the near future via a TEGL. Those other changes, which
   the forthcoming TEGL will address, include an expansion of the deadline for enrollment in
   training and other training requirements that will become effective for workers certified under
   petitions filed on or after May 18, 2009.
4. HCTC Changes. Section 1899A of the Recovery Act amended Section 35(a) of the IRC to
   improve the affordability of the tax credit by covering 80 percent (up from 65 percent) of the
   premium amount paid by eligible individuals for qualified health insurance beginning May
   2009 and through December 2010, and Section 1899B made these premium amounts
 RESCISSIONS                                              EXPIRATION DATE
 None                                                     Continuing

   retroactive to coverage months beginning after December 31, 2008. The IRS will advise
   individuals of these changes, as appropriate.
   The new definition of an “eligible TAA recipient,” as amended by Section 1899C, is effective
   March 2009 through December 2010. An “eligible TAA recipient” continues to be 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 receive TRA but for the fact that s/he has not exhausted unemployment compensation
   (UC) entitlement, and is, therefore, potentially eligible for the HCTC for that month. In
   addition, Section 1899C added a Special Rule to Section 35(c)(2), to provide that, for any
   “eligible coverage month” (that is, any month an individual is eligible for the HCTC) from
   March 2009 through December 2010, an eligible TAA recipient also includes an individual,
   who:
       •   is in a break in approved training that exceeds 30 days, and the break falls
           within the period for receiving TRA provided under the Trade Act. (See TEGL
           No. 11-02, paragraph D.4., Limitations on TRA for an explanation of the
           “period for receiving TRA.”), or
       • is receiving 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. (See TEGL No. 11-02, paragraphs D.2 and D.3, and TEGL No.
           11-02, Change 3 for an explanation of the training requirement(s) in effect for
           petitions filed prior to May 18, 2009. Forthcoming operating instructions will
           provide guidance on the requirements applicable to petitions filed on or after
           that date ).
5. HCTC Data Transmissions. States are currently transmitting records of “eligible TAA
   recipients” to the IRS via the UC Interstate Connection (ICON) network. There is no change
   in the way this information is transmitted. The amended definition (Special Rule) became
   effective for the month of March 2009, therefore in addition to identifying and reporting (to
   the IRS) individuals as “eligible TAA recipients” who are receiving TRA (or would be
   receiving TRA except for not having exhausted UC), states must:
       •   identify and report (to the IRS) individuals as “eligible TAA
           recipients” who are not receiving TRA because of a break in approved
           training that exceeds 30 days, if such individuals are within the period
           for receiving TRA specified under the Trade Act; and

       •   identify and report (to the IRS) individuals as “eligible TAA
           recipients” when they are receiving UC without regard to whether the
           individuals have met the applicable enrollment in training
           deadlines/requirements while receiving such UC benefits.

6. Administrative Costs. National Emergency Grant (NEG) funds are available
   to cover administrative costs for HCTC-related activities including those
   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.




7. Action. State Administrators are to provide this information to appropriate
   staff.

8. Inquiries. Please direct all inquiries to the appropriate regional office.

9. Attachments. Text of Sections 1899A, 1899B and 1899C of the Recovery Act

UIPL21-09a1.pdf (https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2009/UIPL21-09a1.pdf)

                                                                Attachment to UIPL No. 21-09
Text of Sections 1899A, 1899B and 1899C of P.L. No. 111-5

SEC. 1899A. IMPROVEMENT OF THE AFFORDABILITY OF THE CREDIT.
        (a) Improvement of Affordability-
                (1) IN GENERAL- Section 35(a) of the Internal Revenue Code of 1986
                (relating to credit for health insurance costs of eligible individuals) is amended
                by inserting `(80 percent in the case of eligible coverage months beginning
                before January 1, 2011)' after `65 percent'.
                (2) CONFORMING AMENDMENT- Section 7527(b) of such Code (relating to
                advance payment of credit for health insurance costs of eligible individuals) is
                amended by inserting `(80 percent in the case of eligible coverage months
                beginning before January 1, 2011)' after `65 percent'.
        (b) Effective Date- The amendments made by this section shall apply to coverage
        months beginning on or after the first day of the first month beginning 60 days after the
        date of the enactment of this Act.
SEC. 1899B. PAYMENT FOR MONTHLY PREMIUMS PAID PRIOR TO
COMMENCEMENT OF ADVANCE PAYMENTS OF CREDIT.
        (a) Payment for Premiums Due Prior to Commencement of Advance Payments of
        Credit- Section 7527 of the Internal Revenue Code of 1986 (relating to advance
        payment of credit for health insurance costs of eligible individuals) is amended by
        adding at the end the following new subsection:
        (e) Payment for Premiums Due Prior to Commencement of Advance Payments- In the
        case of eligible coverage months beginning before January 1, 2011--
                (1) IN GENERAL- The program established under subsection (a) shall provide
                that the Secretary shall make 1 or more retroactive payments on behalf of a
                certified individual in an aggregate amount equal to 80 percent of the premiums
                for coverage of the taxpayer and qualifying family members under qualified
                health insurance for eligible coverage months (as defined in section 35(b))
                occurring prior to the first month for which an advance payment is made on
                behalf of such individual under subsection (a).
                (2) REDUCTION OF PAYMENT FOR AMOUNTS RECEIVED UNDER
                NATIONAL EMERGENCY GRANTS- The amount of any payment
                determined under paragraph (1) shall be reduced by the amount of any payment
                made to the taxpayer for the purchase of qualified health insurance under a
                national emergency grant pursuant to section 173(f) of the Workforce
                Investment Act of 1998 for a taxable year including the eligible coverage
                months described in paragraph (1).'.
        (b) Effective Date- The amendments made by this section shall apply to coverage
        months beginning after December 31, 2008.
        (c) Transitional Rule- The Secretary of the Treasury shall not be required to make any
        payments under section 7527(e) of the Internal Revenue Code of 1986, as added by this
        section, until after the date that is 6 months after the date of the enactment of this Act.
SEC. 1899C. TAA RECIPIENTS NOT ENROLLED IN TRAINING
PROGRAMS ELIGIBLE FOR CREDIT.
        (a) In General- Paragraph (2) of section 35(c) of the Internal Revenue Code of 1986

(defining eligible TAA recipient) is amended to read as follows:
        (2) ELIGIBLE TAA RECIPIENT-
                (A) IN GENERAL- Except as provided in subparagraph (B), the term
                `eligible TAA recipient' means, with respect to any month, any
                individual who is receiving for any day of such month a trade
                readjustment allowance under chapter 2 of title II of the Trade Act of
                1974 or who would be eligible to receive such allowance if section 231
                of such Act were applied without regard to subsection (a)(3)(B) of such
                section. An individual shall continue to be treated as an eligible TAA
                recipient during the first month that such individual would otherwise
                cease to be an eligible TAA recipient by reason of the preceding
                sentence.
                (B) SPECIAL RULE- In the case of any eligible coverage month
                beginning after the date of the enactment of this paragraph and before
                January 1, 2011, the term `eligible TAA recipient' means, with respect
                to any month, any individual who--
                        (i) is receiving for any day of such month a trade readjustment
                        allowance under chapter 2 of title II of the Trade Act of 1974,
                        (ii) would be eligible to receive such allowance except that such
                        individual is in a break in training provided under a training
                        program approved under section 236 of such Act that exceeds
                        the period specified in section 233(e) of such Act, but is within
                        the period for receiving such allowances provided under section
                        233(a) of such Act, or
                        (iii) is receiving unemployment compensation (as defined in
                        section 85(b)) for any day of such month and who would be
                        eligible to receive such allowance for such month if section 231
                        of such Act were applied without regard to subsections (a)(3)(B)
                        and (a)(5) thereof.
                An individual shall continue to be treated as an eligible TAA recipient
                during the first month that such individual would otherwise cease to be
                an eligible TAA recipient by reason of the preceding sentence.'.
(b) Effective Date- The amendment made by this section shall apply to coverage
months beginning after the date of the enactment of this Act.