Date:November 24, 2003
To:Insurers Authorized to Write Health Insurance in Wisconsin
From:Jorge Gomez, Commissioner of Insurance
Subject:Health Coverage Tax Credit (HCTC)
Alternative qualified plans

The federal Trade Reform Act of 2002 created a federal tax credit to help pay for private health coverage for displaced workers certified to receive certain Trade Adjustment Assistance (TAA) benefits and for individuals receiving benefits from the Pension Benefit Guaranty Corporation (PBGC). The credit is referred to as the Health Coverage Tax Credit (HCTC). I am asking insurers to consider providing qualifying coverage so that Wisconsin residents can take advantage of the Health Coverage Tax Credit.

Certain plans are automatically eligible for the credit.

The law governing the HCTC program identifies three types of health coverage options as automatically qualified for the purposes of the tax credit without requiring any further action from the State.

COBRA: continuation coverage provided under the federal Consolidated Omnibus Budget and Reconciliation Act of 1985.

Individual coverage that was in effect during the entire 30 day period prior to the date the eligible person became separated from the job that makes the individual eligible for TRA benefits, ATAA benefits or payments from the PBGC.

Spousal Coverage: Coverage under a group health plan that is available through the employment of the eligible person's spouse. The spouse's employer must contribute less than 50 percent of the total cost of coverage for the spouse, the HCTC eligible person, and any dependents.

However, many eligible individuals do not have access to the plans described above. The law permits the State to approve other plans, as long as the insurer agrees to provide coverage to eligible individuals who have had at least three months of creditable coverage prior to seeking enrollment.

Under the law governing this program, health plans will only be considered qualified if they meet the following four criteria:

  1. GUARANTEED ISSUE: Each qualifying individuals must be guaranteed enrollment regardless of their medical status and must be permitted to remain enrolled so long as they pay the premium.
  2. NO IMPOSITION OF PREEXISTING CONDITION EXCLUSION: No preexisting condition restriction may be imposed on qualifying individuals.
  3. NONDISCRIMINATORY PREMIUM: The premium charged for a qualifying individual may not be greater than the premium for a similarly situated person who is not receiving the credit.
  4. SAME BENEFITS: Benefits are the same (or substantially the same) under coverage provided to similarly situated individuals who are not qualifying individuals.

Currently, there are no HCTC qualified plans available in Wisconsin. The office receives calls every day from eligible individuals looking for qualified plans so they can use the Health Coverage Tax Credit. I would like to encourage you to submit a new plan or to modify an existing plan to serve HCTC recipients.

OCI will promptly review any filing to ensure that it meets both the federal HCTC criteria and State insurance laws.

Please contact Susan Ezalarab (608-266-8885) of my staff if you have questions or would like further information.

Thank you.