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Compliance Briefing Center

Regulatory Updates

Making it Easier for You
to Manage Benefits

Obama Signs Health Coverage Tax Credit Measure into Law

On June 29, 2015, President Barack Obama signed into law the Trade Preferences Extension Act of 2015. This act will once again make available federal health premium subsidies for employees whose employment terminates due to competition with foreign companies or individuals receiving payments from the Pension Benefit Guaranty Corporation to cover underfunded pension benefits to which they are entitled ("Eligible Individuals").

By way of background, the Trade Act of 2002 created for Eligible Individuals a means of either taking a tax credit or receiving from the federal government an advance payment of 65 percent of the premiums that Eligible Individuals paid for qualified health plan coverage (including coverage under COBRA). The American Recovery and Reinvestment Act of 2009 (ARRA) increased the amount of this tax credit to 80 percent for coverage months beginning after April 2009 and before 2011. This increased credit period was extended by the Omnibus Trade Act of 2011 for an additional two months (for coverage months ending before February 13, 2011). After the ARRA provisions expired, the 80 percent healthcare tax credit decreased from 80 percent to 65 percent. In 2011, President Obama signed into law the Trade Adjustment Assistance Extension Act of 2011, which subsequently increased the tax credit from 65 percent to 72.5 percent for coverage months beginning after February 12, 2011 and before January 1, 2014.

The Trade Preferences Extension Act of 2015 restores this refundable healthcare tax credit of 72.5 percent and extends it until January 1, 2020.

It is worth noting that coverages offered in the public exchanges established under the Affordable Care Act are not eligible for these premium subsidies. 

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