Dear DSRA Benefit Trust Participants:

The Trustees of the DSRA Benefit Trust are pleased to inform you that both Houses of the U.S. Congress have approved a temporary reinstatement of the Health Coverage Tax Credit (HCTC) for Qualified Family Members and have increased the HCTC subsidy for all eligible recipients from the current 65% to 72.5%.  Both enhancements are retroactive to February 13, 2011 when the provisions of the American Recovery and Reinvestment Act (ARRA) of 2009 expired. The legislation will be signed into law by President Obama. 

These legislative changes were the result of bipartisan cooperation based, at least in part, on the Patient Protection and Affordable Care Act (PPACA) signed into law on March 23, 2010 by President Obama.  PPACA reforms certain aspects of the private health insurance industry and public health insurance programs, including increasing insurance coverage of pre-existing conditions, and expanding access to insurance to over 30 million Americans.  PPCAC is intended to be fully in place on January 1, 2014, pending current litigation as to the constitutionality of the program. 

Accordingly, the compromise legislation calls for the HCTC Program to be temporarily enhanced as noted above until the end of 2013.  At the end of 2013, the HCTC program will terminate.  

This means that Delphi retirees receiving their pensions from the PBGC aged 55-64 and the spouses of retirees who are both Medicare-eligible and under age 67 will continue to receive the HCTC subsidy until the end of 2013. 

Although we are disappointed that the HCTC program will end, it does provide at least another 2 years of subsidies and time for retirees to prepare for life after the HCTC

We are in direct communications with HCTC officials to find out how they will manage the changes to their billing process and how people will obtain refunds of any money that may now be due, but at this time, those details are not available and may take several weeks to develop.  As soon as we receive updates, we will pass them along to you.  HCTC has asked that you do not contact their call center at this time, since that staff will not have any additional information.  HCTC will also post updates on their website.     

The DSRA Benefit Trust and all Delphi retirees are indebted to the steadfast dedication of DSRA, Inc., its Legal Team, and all retirees who supported their efforts in securing these benefits for their fellow retirees.      

Your DSRA Benefit Trust Board of Directors

Documents related to the Health Coverage Tax Credit.

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HCTC Latest News, Overview and Background

 

Health Coverage Tax Credit Logo

Latest News

February 18, 2009:
President Obama recently signed the Trade Adjustment Assistance Health Coverage Improvement Act of 2009. This new law was part of the American Recovery and Reinvestment Act of 2009, better known as the "stimulus bill" in the press, and has changed the Health Coverage Tax Credit (HCTC).

The HCTC Program is in the process of reviewing the new law and the changes that have been made to the tax credit. The newest information on these changes will be posted here as soon as it is available. The HCTC Program will post updates here on a frequent basis, so please refer back to this page for the latest information. You can expect new information at the beginning of March 2009.

Please be aware that some of the HCTC materials available to you - including pages and documents on this website - may not be updated immediately due to these recent changes. The program will update these materials as quickly as possible.

NOTE: The HCTC Program is different from the Premium Assistance for COBRA Benefits program established by the stimulus bill. Information on the new COBRA program is not available from the HCTC Program.


HCTC Overview

The HCTC helps certain trade-affected workers, retirees, and their families pay their health insurance premiums. The HCTC makes health coverage more affordable by paying 65% of health insurance premiums for individuals who are eligible for the tax credit.

The HCTC is a refundable tax credit - it is paid in full no matter how much federal income tax an eligible individual owes. The HCTC is available on a monthly basis to help individuals pay their health insurance costs as they become due or on a yearly basis when they file their federal tax return. The HCTC Program partners with various federal and state agencies and Health Plan Administrators (HPAs) to deliver the tax credit to eligible individuals.


History and Purpose of the HCTC
The HCTC was created as part of the Trade Act of 2002. Congress created the HCTC Program to help:

  • workers who lost their jobs due to trade and qualified for Trade Adjustment Assistance (TAA) or Alternative Trade Adjustment Assistance (ATAA)
  • retirees, over age 55, whose pensions were taken over by the Pension Benefit Guaranty Corporation (PBGC)

The HCTC legislation also provided that family members of these trade-affected workers and retirees can receive the tax credit.

Congress understood that losing one's health coverage could be as distressing as losing one's job or having one's pension taken over. The purpose of the HCTC, therefore, is to make health coverage more affordable for these groups of people who otherwise might not be insured. The HCTC is unique, because it is the first time a federal tax credit is being used to help people who are affected by trade or employers experiencing financial hardship afford health insurance coverage.

The HCTC was first made available on a monthly basis in August 2003, and on a yearly basis for Tax Year 2002. The HCTC Program continually makes operational improvements to better administer this pioneering tax credit.

What is the Health Care Tax Credit (HCTC) Program?

 How do I Qualify for it? 

  HEALTH COVERAGE TAX CREDIT (HCTC) FAQs 

Q. Do Delphi Retirees qualify for the HCTC since Delphi terminated my subsidized Healthcare insurance? A.   You only become eligible for the HCTC IF/When your company sponsored pension plan is turned over to the PBGC and the PBGC accepts the plan.  Therefore, at this time, Delphi retirees are not eligible for this plan at the present time.  

Q. What is the Health Coverage Tax Credit (HCTC) that I’ve heard about?A. The Health Coverage Tax Credit (HCTC) is a federal tax credit that pays 65% of qualified health plan premiums for eligible trade- impacted workers and certain Pension Benefit Guaranty Corporation (PBGC) benefit recipients. The IRS administers the HCTC Program in partnership with other federal agencies, the states, and the private health industry. The HCTC has been increased to 80% until at least January 01, 2011.  After that date, it may be returned to the 65% level, that has yet to be determined. 

Q. Does Delphi decide if I am eligible for the HCTC?A. No. Eligibility is determined by the federal government agencies responsible for administering the HCTC in accordance with the law and regulations concerning this tax credit.

Q. Will I qualify for the HCTC if I get a pension payment from the PBGC?A. One of the ways that an individual may qualify to receive the HCTC is if he or she is a retiree, survivor or alternate payee, at least age 55 years old, who receives pension payments from the PBGC. Receiving a pension payment from the PBGC makes you potentially eligible for the HCTC. However, there are other factors that may disqualify a person from qualifying for the HCTC even if they are receiving a payment from the PBGC. Therefore just because you get a payment from the PBGC does not mean you will qualify for the HCTC.

Q. How can I be disqualified from the HCTC?A. There are several factors that can disqualify you from the HCTC. For instance, your health plan may not be qualified, you may be entitled to Medicare, or you may be entitled to health coverage through the military health system (TRICARE/CHAMPUS). These are just some of the things that may disqualify you. Check the IRS website http://www.irs.gov/individuals/article/0,,id=109915,00.html to find out if you are eligible for the HCTC.

Q. Is my Delphi coverage qualified for the HCTC?A. COBRA continuation coverage from Delphi is the only Delphi coverage that is “qualifying” for purposes of the HCTC. This means that if you have the Delphi COBRA plan you can use the HCTC to pay for 65% your premium. The Delphi Self-Pay Plans are not eligible for the HCTC Coverage is not a qualified plan for the HCTC. Even if you receive a pension payment from the PBGC and enroll in Delphi’s COBRA coverage or another qualified plan, you must still meet all other qualification requirements to be eligible for the HCTC. Refer http://www.irs.gov/individuals/article/0,,id=109915,00.html for more information.

Q. I was not offered COBRA coverage from Delphi. Is there other coverage that I have access to that may be qualified coverage for purposes of the HCTC?A. Maybe. You can either enroll in an HCTC state qualified health plan or use your spouse’s employer-sponsored plan. State qualified plans are available in most states. To see what plans are offered in your state, visit http://www.irs.gov/individuals/article/0,,id=110016,00.html. You can also claim the HCTC with a health plan your spouse has through his/her current or former employer. If your spouse’s health plan is COBRA, you can receive the credit each month in advance.However, if your spouse’s health plan is not COBRA, then you can only claim the HCTC at the end of the year on your federal tax return.

Q. If my Delphi Pension is turned over to the PBGC and a settlement agreement is reached regarding the Delphi Retirement Plan termination. What are the next steps?A. One of the next steps is for the PBGC and Delphi to work out a Trusteeship agreement.  We would expect that this agreement will determine a date for the PBGC to become trustee of the plan.

Q. When am I eligible for the HCTC?A. Not until the trustee arrangements are established will the date in which you are first eligible for the HCTC be known. If you would like general information about timing of the availability of the HCTC, you can refer to the PBGC website at http://www.pbgc.gov/workers-retirees/benefits-information/content/page13692.html#5

Q. How will the process for qualifying for the HCTC be started?A. According to the IRS and PBGC websites, the PBGC will send a list of individuals receiving a PBGC pension payment to the HCTC Program. The HCTC Program will mail out an HCTC Program Kit to these individuals. That kit explains the steps in determining eligibility and the actions that an individual should take to receive the HCTC. The kit also includes an HCTC Registration Form that individuals need to fill out to register for the advance monthly credit program. Individuals can only register for the monthly credit program after they receive the Program Kit and Registration Form in the mail. If you would like to look at this Program Kit, it is on- line at http://www.irs.gov/pub/irsutl/hctc_program_kit_07-05.pdf

Q. What do you mean when you speak of claiming the HCTC in advance on a monthly basis?A. The HCTC can be claimed in one of two ways. One way is to pay your health plan directly each month and then claim the HCTC on your federal tax return at the end of the year. If you meet all the eligibility requirements and are in a qualified health plan, then you will receive the HCTC either as a tax refund or as a credit to the taxes you owe. The other way to receive the HCTC is to register for the monthly credit program and receive the tax credit in advance as your health plan premiums are due. To do this, you have to fill out the HCTC Registration Form you receive in the mail, attach important documents and mail it to the HCTC Program. If the HCTC Program approves your registration, it will send you an invoice for 35% (reduced to 20% through 2010) of your health plan premium. Then when you send your 35% (20%) payment to the HCTC Program by the due date on the HCTC invoice, the HCTC Program will add the remaining 65% (80% due to the Stimulus Plan at least through 2010) and send the full 100% payment to your health plan. See the HCTC Program Kit for information http://www.irs.gov/pub/irsutl/hctc_program_kit_07-05.pdf .

Q. I have no pension check from the Delphi. Can I get the HCTC?A. The law provides that the HCTC may be available if an individual receives a pension benefit payment from the PBGC. This could indicate that a person who does not receive a payment from the PBGC will not qualify for the HCTC. You will need to contact the PBGC if this applies to your situation. 

Q. Are my family members eligible for the HCTC?A. According to the IRS website, your family members may be eligible for the HCTC if you are eligible and they don’t have any disqualifying criteria applicable to them. Your family members also must have a qualified health plan. They can either be enrolled in the same qualified plan as you or they can have their own separate, qualified plan. For information about disqualifying criteria, go tohttp://www.irs.gov/individuals/article/0,,id=109915,00.html

Q. I am an over age 65 retiree entitled to Medicare and my spouse is under age 65.Is she eligible for the HCTC?A. The IRS website states: “If you are entitled to Medicare, you are not eligible for the HCTC. Since you are not eligible, your family members (including your spouse) are also not eligible for the HCTC.”( There may be some flexibility with this requirement with the recent announcement of the Stimulus plan announced February 17, 2009)

Q. Are my premiums for vision and dental coverage eligible for the HCTC?A. If you purchase dental and vision benefits as part of a comprehensive package then, according to the IRS website, they may qualify for the HCTC. However, if you separately add on dental or vision coverage, then the portion of your premium that pays for the dental or vision will not receive the HCTC. For instance, if your total health plan premium is $525 and $25 of that premium is for a separate vision plan, then the 65% (80% through 2010) credit would only be applied to $500.

 The Family Member Registration Form (IRS/HCTC Form 14117) is now available. Family members who are currently enrolled or were recently cancelled from the program can download the form and send it in now.  The retiree should use this form for their family members if they are already Medicare eligible and/or the Medicare status occurred within the last 24 months; due to turning 65 or disability, or the divorce or death of the retiree.  This is the form to use for the new law that went into effect January 1st, 2010.

Click here for the IRS page related to this information
Click here for Form 14117
Click here for Step-by-Step instructions for Form 14117

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