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Health Coverage Tax Credit could be revived

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Employees who lose their jobs due to foreign competition, as well as retirees in failed pension plans, again would be eligible for generous federal health insurance premium subsidies under legislation approved by the U.S. Senate.

The subsidy, known as the Health Coverage Tax Credit, expired at the end of 2013. It paid 72.5% of health care premiums, such as for COBRA coverage, for eligible beneficiaries — those who lost their jobs due to foreign competition and retirees at least age 55 who worked for companies whose pension plans were taken over by the Pension Benefit Guaranty Corp.

The subsidy, included in a broad trade bill, H.R. 1314, which was approved Friday by the Senate on a 62-37 vote, also would be available to individuals enrolled in special trusts known as voluntary employee beneficiary associations, largely set up for the purpose of enabling enrollees to use the subsidies to help pay for VEBA-arranged coverage. Such VEBAs, for example, have been established for individuals who worked for steel companies that later failed.

Under the measure, the HCTC subsidy would be available through the end of 2019.

If the HCTC subsidy legislation wins final congressional approval, it could mean a big reduction in health care premiums for beneficiaries compared with obtaining coverage in public exchanges authorized by the health care reform law.

That is because the size of the HCTC subsidy would not be linked to beneficiaries' income. By contrast, Affordable Care Act premium subsidies for exchange coverage are based on beneficiaries' income, with the subsidies not available to those earning more than 400% of the federal poverty level which is set at $11,770 for an individual in 2015.

The House is expected to begin consideration of the measure next week.