Since 2002, premium assistance toward COBRA or other health coverage has been available to certain individuals whose jobs were lost due to foreign trade-related agreements.  The assistance has been in the form of a refundable Health Care Tax Credit (HCTC), equaling 65% of health premium. This provision has been extended several times since first enacted in 2002, and had expired as of February 14, 2011. The law has been extended again, retroactive to February 14, 2011, by way of the Adjustment Assistance (TAA) Extension Act of 2011, signed by President Obama on October 21, 2011. Following are highlights of this law:

• The HCTC will increase from 65% to 72.5%, effective retroactively to February 14, 2011.  Individuals covered during any month between March and December 2011 and had received the 65% credit rate are entitled to the retroactive 72.5% credit rate.  Beginning with January 2012 invoices, the monthly HCTC will be 72.5% of qualified health insurance premium.
• TAA recipients whose COBRA end date occurs on or after November 21, 2011 are eligible to extend their COBRA coverage through their former employer for as long as they have TAA eligibility, or until January 1, 2014.
• The HCTC is extended to qualified family members in the event of death, divorce, or enrollment in Medicare of the TAA recipient.  This provision applies for the entire 2011 tax year through January 1, 2014. 

Unless extended again by Congressional action, the TAA Extension Act of 2011 will expire on January 1, 2014.  

Additional information, including a side-by-side synopsis of changes made to the law, is available via the DOL’s Employment and Training Administration’s website (http://www.doleta.gov/tradeact/), as well as the IRS website.

The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this Benefit Beat is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.