The U.S. Senate has approved trade legislation that would boost federal health insurance premium subsidies for employees who lose their jobs due to foreign competition and older retirees in failed pension plans.
The provision approved Sept. 22 involves the Health Coverage Tax Credit and is part of the Trade Adjustment Assistance Reform Act of 2002.
Federal lawmakers originally set the subsidy as a 65 percent federal tax credit. In 2009, an economic stimulus law raised the credit to 80 percent through Dec. 31, 2010. Last year, Congress approved a temporary extension through Feb. 13. The subsidy reverted to 65% percent after lawmakers in February could not agree on another extension.
The measure, H.R. 2832, approved by the Senate on a 70-27 vote, would raise the tax credit to 72.5 percent until 2014.
Aside from those who lose their jobs due to foreign competition, the subsidy would be available to those at least age 55 whose pension plans have been taken over by the Pension Benefit Guaranty Corp.
The tax credit can be used to offset the cost of a variety of health insurance plans, including COBRA continuation coverage and individual plans offered by commercial insurers. Nearly 60 percent of beneficiaries use the credit to pay COBRA premiums.
Under a system implemented by the Internal Revenue Service, the beneficiary pays 35 percent of his or her premium to the government. Then the IRS remits the full amount to the health plan or plan administrator.
Under a system implemented by the Internal Revenue Service, the beneficiary pays 35 percent of his or her premium to the government. Then the IRS remits the full amount to the health plan or plan administrator.
The measure now has to be considered by the House.
Jerry Geisel writes for Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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