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

UI

CORRESPONDENCE SYMBOL

OWS - DUIO

ISSUE DATE

August 18, 2003

RESCISSIONS

None

EXPIRATION DATE

August 31, 2004

ADVISORY

:

UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 33-03

 

TO

:

ALL STATE WORKFORCE AGENCIES

 

FROM

:

CHERYL ATKINSON s/s
Administrator
Office of Workforce Security

 

SUBJECT

:

Questions and Answers About Implementation of the Advance Health Coverage Tax Credit

  1. Purpose. To respond to state workforce agenciesí questions about their responsibilities for the advance Health Coverage Tax Credit.

  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; Unemployment Insurance Program Letter No. 02-03; Unemployment Insurance Program Letter No. 24-03; Training and Employment Guidance Letter No. 10-02; Training and Employment Guidance Letter No. 11-02; Training and Employment Guidance Letter No. 20-02; and Trade Adjustment Assistance Reform Act of 2002.

  3. Background. The Trade Adjustment Assistance Reform Act of 2002 (the Act) created a federal tax credit which subsidizes private health insurance coverage for displaced workers certified to receive certain trade adjustment assistance (TAA) benefits, for older workers receiving alternative trade adjustment assistance (ATAA) benefits, and for individuals receiving benefits from the Pension Benefit Guaranty Corporation (PBGC). The tax credit is 65 percent of the premium amount paid by eligible individuals for qualified health insurance coverage. This credit is referred to as the Health Coverage Tax Credit (HCTC) and is administered by the Internal Revenue Service (IRS). Two options are available to an eligible individual to receive the benefit. Taxpayers may (1) elect to claim the 65 percent credit on their federal tax return when filing at the end of the tax year or (2) obtain an advance credit of 65 percent which requires the taxpayer to pay the 35 percent balance of the monthly premium. The advance credit option is available effective August 1, 2003.

    This advisory is issued to state workforce agencies as guidance on their role to identify and provide listings of eligible TAA and ATAA recipients to the IRS for its administration of the HCTC.

  4. Action Required. Administrators are requested to provide this information and instructions to the appropriate staff.

  5. Inquiries. Inquiries should be directed to your Regional Office.

  6. Attachments.

    1. Health Coverage Tax Credit - Questions and Answers
    2. Eligibility Examples