U.S. Senate Introduces Bill to Increase Health Coverage Tax Credit

July 24, 2007 (PLANSPONSOR.com) - Legislation introduced in the U.S. Senate would provide an 85% tax credit - up from the current 65% - that employees who lose their jobs due to foreign competition and pension plan participants age 55 to 64 whose pension plans fail could apply toward their health insurance premiums.

According to Business Insurance, Senate Finance Committee Chairman Max Baucus (D-Montana), a co-sponsor of the bill, said the requirement that eligible individuals pay 35% of the premium is the main reason few use the health coverage tax credit. The credit was created under a 2002 law and is set to expire September 30 of this year.

The credit can be used to offset the cost of a variety of health insurance plans, including COBRA continuation coverage, individual plans offered by commercial insurers, and state pools that meet certain standards, Business Insurance said. The new bill, called the Trade and Globalization Adjustment Assistance Act of 2007, would also allow beneficiaries to use the tax credit for coverage available through a voluntary employee beneficiary association. 

The Finance Committee plans to consider the legislation following the Senate’s August recess.