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Committee on Ways and Means

For Immediate Release
Contact: Press Office 202-225-8933
January 10, 2002

Bush Displaced Worker Health
Care Tax Credit:  Proposal

• The Bush proposal provides a refundable, advancable tax credit to all displaced workers eligible for Unemployment Insurance for the purchase of health insurance.  (Individuals with access to health insurance through a spouse [subsidized at least 50% by the employer] or a government program [Medicare, Medicaid, SCHIP or military retirees] are not eligible for the credit).
• The credit is 60% of the premium with no cap, and is available to individuals for a total of 12 months in 2002and 2003.
• Total cost of the credit proposal is $12.9 billion.  This is in addition to $4 billion in discretionary emergency grants to the states to provide health care and job training assistance, and $4.6 billion in formula payments to states for additional health services.
• Health care policies must meet Health Insurance Portability and Accountability Act (HIPAA) standards, which exclude so-called “excepted benefits” policies such as long-term care or dental insurance.
• Individuals can stay in their employer COBRA coverage or they can choose policies in the individual market that may better fit their family’s needs.  (CRS estimates the average monthly premium in the individual market is $194).  Joint Tax estimates 2/3rds of individuals will stay in COBRA coverage.
• The proposal includes insurance reforms to ensure access to the individual market.  If an individual had 12 months of employer sponsored coverage, insurers are required to sell the health care policy and not impose any pre-existing condition exclusions.