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WASHINGTON—The Obama administration is backing a temporary boost in federal subsidies of health insurance premiums, such as COBRA coverage, for workers who lose their jobs due to foreign competition and older retirees in failed pension plans.
A 2002 law created the subsidy, the Health Coverage Tax Credit, and set a federal tax credit of 65%. 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.
However, the subsidy reverted to 65% after lawmakers in February could not agree on another extension.
Larger credit through 2013
In its announcement Tuesday, the Obama administration said it would back raising the tax credit to 72.5%, but then letting it expire after Dec. 31, 2013. That is when key provisions under the health care reform law take effect, including federal subsidies of health insurance premiums for the lower-income uninsured.
Raising the tax credit to 72.5% would make health care coverage more affordable, the administration said. Senate Finance Committee Chairman Max Baucus, D-Mont., said he supports the new health tax credit and has incorporated it in a draft trade bill with South Korea that his committee will discuss Thursday.
Aside from workers who those lose their jobs due to foreign competition, the subsidy also is available to those at least age 55 whose pension plans have been taken over by the Pension Benefit Guaranty Corp.
Several measures have been introduced in Congress to reinstate the 80% subsidy, but no action has been taken on any of the proposals.
WASHINGTON—A law that provided greater federal health insurance premium subsidies, such as COBRA coverage, to workers who lose their jobs due to foreign competition and older retirees in failed pension plans has expired due to congressional inaction.