EMPLOYMENT AND TRAINING ADMINISTRATION
ADVISORY SYSTEM
U.S. DEPARTMENT OF LABOR
Washington, D. C. 20210

CLASSIFICATION

OWS

CORRESPONDENCE SYMBOL

OWS DUIO

ISSUE DATE

October 10, 2002

RESCISSIONS

None

EXPIRATION DATE

October 31, 2004

ADVISORY

:

UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 02-03

 

TO

:

ALL STATE WORKFORCE AGENCIES

 

FROM

:

CHERYL ATKINSON
Administrator
Office of Workforce Security

 

SUBJECT

:

Health Insurance Tax Credit for Eligible Trade Adjustment Assistance/Trade Readjustment Allowances (TAA/TRA) Recipients

  1. Purpose. To provide state workforce agencies with information about new responsibilities related to an income tax credit for health insurance premiums available to eligible TAA/TRA recipients for 2002.

  2. References. The Trade Act of 1974, as amended (P.L. 93-618, as amended); the Trade Act of 2002 (P.L. 107-210); 20 CFR 617; 29 CFR 90; General Administration Letter 7-94 with Changes 1, 2, and 3. The amendments to the TAA program may also be referred to as the Trade Adjustment Assistance Reform Act of 2002.

  3. Background. The Trade Act of 2002 (the Act) extended and amended the TAA program and authorized a federal income tax credit for health insurance premiums paid by eligible TAA recipients. Operating Instructions are being developed for the substantive amendments to the TAA program as well as the health insurance tax credit. Both will be issued in the near future. However, because the health insurance tax credit will be available on tax year 2002 Form 1040 returns, state agencies will be required to provide information to the Internal Revenue Service (IRS) by November 22, 2002. In addition, states will be required to issue an IRS form for tax year 2002 to individuals who received TRA (or would have been eligible to receive TRA had their UI been exhausted) during December 2002.

  4. Action Required. This advisory alerts the state workforce agencies to begin programming efforts to compile a listing of individuals (specified below) which the IRS will use to issue information packets about the health insurance tax credit along with a form and instructions for claiming the credit on 2002 returns. States should begin programming IRS Form 8887 (attached) into their benefits systems to comply with requirements of the health insurance tax credit. IRS Form 8887 will be used as documentation of TAA/TRA eligibility by individuals who claim the tax credit.

  5. Administrative Costs. Funding from National Emergency Grants (NEG) will be available to cover administrative costs for activities described in this advisory and other activities related to this health insurance tax credit. States will need to submit requests for funding according to special application procedures for NEG funds, which will be issued in the near future. States may request funding for pre-award costs for activities described above that were undertaken subsequent to the passage of the Act.

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

  7. Attachment.
    Attachment A - Record Layout for the Health Insurance Tax Credit Mailout
    Attachment B - Mail Information Media Format
    Attachment C - IRS Form 8887 and Instructions.