June 12, 2003 | WebMemo on Health Care
Starting August 1, 2003, displaced trade workers will be able to access a federal health care tax credit worth 65 percent of a qualified health plan's cost. However, the credit - made possible when the Trade Adjustment Assistance (TAA) Act passed in 2002 - strictly defines what constitutes qualified health care coverage into four categories.
Congress should fix this unintended consequence immediately and expand health care coverage options so eligible workers and their families have access to all coverage options.
Provisions were included in TAA to provide, through a health care tax credit, financial assistance to qualified TAA workers and certain Pension Benefit Guaranty Corporation (PBGC) beneficiaries to help them obtain health care coverage during their period of unemployment.
Strictly defining what constitutes qualified health care coverage will result in some workers possessing a generous tax credit but no coverage to which to apply it.
Under the provisions of the law, there are four categories of "qualified coverage options" to which workers could apply their credit. They are:
While well-intentioned, however, these coverage options are not accessible to all workers. There are a variety of reasons why workers would not qualify for the specified coverage options and, therefore, would have nowhere to apply their credit.
Filling in the Gaps; Broadening Access
As noted above, not all workers qualify for the congressionally designated coverage options. Therefore, Congress should allow workers who do not qualify or choose not to participate in the congressionally designated coverage options to apply their credit to coverage of their own choice. At a minimum, Congress should allow workers whose states have not acted by the August 1 starting date to use their credit for a policy they obtain on their own.
This is another health care debate over personal choice. At issue is whether individuals should be prevented from using the credit outside the congressionally designated options for fear that those individuals would not have the "protections" imposed on policies through the regulatory requirements. However, the more serious issue is whether these workers and their families will have access to all, not just congressionally determined, coverage options or will remain further at risk by staying uninsured. Congress should act now to ensure that all displaced workers eligible for the health care tax credit are able to use their credit to secure the coverage of their choice for themselves and their families.
Kaiser Family Foundation
and Health Research and Educational Trust, Employer Health
Benefits 2002, Henry J. Kaiser Family Foundation, Menlo Park,
California, 2002, p. 13.
These regulatory requirements include guaranteed issue, pre-existing condition exclusions, nondiscriminatory benefits, and similarly situated benefits.