Tax Credits

Recent Publications

NEW — Limited Take-Up of Health Coverage Tax Credits and the Design of Future Tax Credits for the Uninsured, by Stan Dorn (Economic and Social Research Institute), Janet Varon (Northwest Health Law Advocates), and Fouad Pervez (Economic and Social Research Institute), October 2005. Prepared for the Commonwealth Fund, this report analyzes the federal tax credits that were created as part of the Trade Act of 2002 to subsidize health coverage for certain early retirees and workers displaced by international trade. Though small, this relatively new program offers the opportunity to learn how to design future tax credits for larger groups of uninsured.The report is available in two forms—an issue brief and a longer research report. For the issue brief, click here. For the research report, click here. .

Early Implementation of the Health Coverage Tax Credit in Maryland, Michigan, and North Carolina: A Case Study Summary, by Stan Dorn, Tanya Alteras, and Jack A. Meyer, April 2005. Prepared for The Commonwealth Fund. A summary report of studies in three states that achieved above-average results enrolling potentially eligible individuals into Health Coverage Tax Credits (HCTCs) available for certain displaced workers and early retirees. This overview report finds both significant accomplishments and serious problems, recommending a number of program reforms. The individual state reports are also available as follows:

• Health Coverage Tax Credits in North Carolina: Heroic Efforts, Modest Results, Stan Dorn
• Maryland’s Experiences with Implementation of the Trade Act of 2002 and the Health Coverage Tax Credit, Tanya Alteras
• Michigan’s Experiences with Implementation of the Trade Act of 2002 and the Health Coverage Tax Credit, Tanya Alteras

How Can National Policymakers Improve Health Coverage Tax Credits Provided under the Trade Act of 2002? by Stan Dorn, May 2004. On May 4, 2004, 54 Senators in both parties voted for an amendment that would have made significant changes to Health Coverage Tax Credits (HCTC), as part of a much broader adjustment to the country's Trade Adjustment Assistance (TAA) program. However, because 60 votes were needed to overcome a budget-related point of order, the amendment failed. Today's report summarizes the amendment but goes beyond it to identify many other options for change, along with each alternative's advantages and disadvantages. Between 200,000 and 300,000 workers and their families qualify for HCTCs. Eligible groups include both unemployed workers displaced by international trade and early retirees receiving payments from the Pension Benefit Guaranty Corporation. HCTCs pay 65 percent of health insurance premiums for qualified health insurance, which consists primarily of COBRA coverage offered by former employers and state-arranged, private health insurance.

Health Coverage Tax Credits Under the Trade Act of 2002, by Stan Dorn and Todd Kutyla of ESRI, prepared for the Commonwealth Fund and the Nathan Cummings Foundation, April 1, 2004. This new report analyzes the initial effects of the Health Coverage Tax Credits program created by the 2002 Trade Act. Just 3.6% of 235,000 potentially eligible workers—a total of 8,400—were enrolled at the end of 2003 in the program’s system for advancing tax credits to insurers when monthly premiums are due. The authors say that the precise causes of this low rate of uptake are unclear, as is its future persistence. Barriers to enrollment that may need to be addressed include premiums that appear to be too high for many unemployed workers, even with a tax credit, and requirements that laid-off workers “front” one or more months of premiums in full before the advance tax credit kicks in.The authors also praise federal officials for establishing, more rapidly and broadly than many observers thought would be possible, a novel and generally effective federal and state infrastructure for administering this complex program. The full report and an issue brief version, as well as the press release, are available in PDF format.

*PDF formatted documents retain all formatting and layout of the original document, including tables and graphs. Such documents can be downloaded, read, and printed by anyone who has downloaded and installed Adobe Acrobat 3.0, which is available for no charge from Adobe's Web Site.)