Understanding Changes in the Health Coverage Tax Credit

In October of last year, participants in the Health Coverage Advance Monthly Program were sent letters advising them to seek alternative insurance options as the Health Coverage Tax Credit (HCTC) was set to expire at the end of 2020. However, this credit has now been extended through December 31, 2021. Clients who were previous participants can re-enroll and work with their health insurance providers to get on a program that qualifies for this credit.

What is the Health Coverage Tax Credit (HCTC)?

The HCTC is a tax credit that helps individuals cover the cost of certain types of health insurance. The credit will reimburse participants for 72.5% of what they pay directly to insurance vendors or providers. For instance, individuals who are covered under group health programs through their job or their spouse's job, can claim the credit as long as the employer does not pay 50% or more of the cost of the plan. In addition, individual’s whose insurance was not purchased through the Health Insurance Marketplace and COBRA coverage, with an employer paying less than 50% of the cost, can qualify as well.

What’s changed with the HCTC?

Last year, it looked like the tax credit was going to expire, meaning brokers and vendors had to find other coverage to offer. As a result, all participants were removed from the HCTC Advance Monthly Program. Now with the HCTC credit extension through the end of 2021, brokers and vendors will again be receiving premium subsidy payments for their clients' coverage.

Who is Eligible for the HCTC?

Those who cannot qualify for the HCTC include, those who can be claimed as a dependent on someone else's federal tax return or individuals who are covered by insurance that includes coverage through the Affordable Care Act Marketplace, Medicare, Medicaid, the Children's Health Insurance Program, or the Federal Employee Health Benefits Program.

How can clients enroll or re-enroll in the HCTC Advance Monthly Program?

To re-enroll in the HCTC program it is not automatic, one must simply submit a new Form 13441-A, for the Health Coverage Tax Credit (HCTC) Monthly Registration and Update.

The form can be submitted in three ways.

• Mail in the new enrollment form to the listed address.
• Fax the form to 1-855-250-1731. Applicants must include their HCTC PIN or the last four digits of their Social Security Number on every page they fax. They must also include a cover set with their name, the date, and either their HCTC PIN or the last four of their SSN when faxing.
• Submit the form via email. Clients can simply send the form along with their name, the date, and either their PIN or SSN to wi.hctc.stakehldr.en@irs.gov. As email is not always secure, those submitting a form are advised to password protect email with the form and then send the password separately.

It can take up to six weeks for applicants to receive a response. While waiting for approval, clients are advised to not send in duplicate forms and should continue paying full premiums. Once the provider receives the approval letter, a new rate will be issued that will go back to the subsidized level.

Letting clients know about their eligibility may encourage them to seek out coverage that they let lapse, allowing them to find that a program that covers more but was previously outside their budget.