Senate backs higher tax credit for certain health insurance premiums
Reprints
WASHINGTON—The U.S. Senate has approved trade legislation that would boost federal health insurance premium subsidies for employees who lose their jobs due to foreign competition and older retirees in failed pension plans.
The provision approved Thursday involves the Health Coverage Tax Credit and is part of the Trade Adjustment Assistance Reform Act of 2002.
Federal lawmakers originally set the subsidy as a 65% federal tax credit. In 2009, an economic stimulus law raised the credit to 80% through Dec. 31, 2010. Last year, Congress approved a temporary extension through Feb. 13. The subsidy reverted to 65% after lawmakers in February could not agree on another extension.
Would raise tax credit
The measure, H.R. 2832, approved by the Senate on a 70-27 vote, would raise the tax credit to 72.5% until 2014.
Aside from those who lose their jobs due to foreign competition, the subsidy would be available to those at least age 55 whose pension plans have been taken over by the Pension Benefit Guaranty Corp.
The tax credit can be used to offset the cost of a variety of health insurance plans, including COBRA continuation coverage and individual plans offered by commercial insurers. Nearly 60% of beneficiaries use the credit to pay COBRA premiums.
Beneficiary pays 35%
Under a system implemented by the Internal Revenue Service, the beneficiary pays 35% of his or her premium to the government. Then the IRS remits the full amount to the health plan or plan administrator.
Under a system implemented by the Internal Revenue Service, the beneficiary pays 35% of his or her premium to the government. Then the IRS remits the full amount to the health plan or plan administrator.
The measure now has to be considered by the House.
Read Next
-
Congress approves 6-week health insurance subsidy extension
WASHINGTON—After a significant modification, Congress has given final approval to legislation that would give a six-week extension to a federal law that subsidizes health insurance premiums, such as for COBRA coverage, to workers who lose their jobs due to foreign competition and older retirees in failed pension plans.
