§ 35. Health insurance costs of eligible individuals
(a)
In general
In the case of an individual, there shall be allowed as a credit against the tax imposed by subtitle A an amount equal to 65 percent (80 percent in the case of eligible coverage months beginning before February 13, 2011) of the amount paid by the taxpayer for coverage of the taxpayer and qualifying family members under qualified health insurance for eligible coverage months beginning in the taxable year.
(b)
Eligible coverage month
For purposes of this section—
(c)
Eligible individual
For purposes of this section—
(2)
Eligible TAA recipient
(A)
In general
Except as provided in subparagraph (B), the term “eligible TAA recipient” means, with respect to any month, any individual who is receiving for any day of such month a trade readjustment allowance under chapter 2 of title II of the Trade Act of 1974 or who would be eligible to receive such allowance if section 231 of such Act were applied without regard to subsection (a)(3)(B) of such section. An individual shall continue to be treated as an eligible TAA recipient during the first month that such individual would otherwise cease to be an eligible TAA recipient by reason of the preceding sentence.
(B)
Special rule
In the case of any eligible coverage month beginning after the date of the enactment of this paragraph and before February 13, 2011, the term “eligible TAA recipient” means, with respect to any month, any individual who—
(i)
is receiving for any day of such month a trade readjustment allowance under chapter 2 of title II of the Trade Act of 1974,
(ii)
would be eligible to receive such allowance except that such individual is in a break in training provided under a training program approved under section 236 of such Act that exceeds the period specified in section 233(e) of such Act, but is within the period for receiving such allowances provided under section 233(a) of such Act, or
(iii)
is receiving unemployment compensation (as defined in section
85
(b)) for any day of such month and who would be eligible to receive such allowance for such month if section 231 of such Act were applied without regard to subsections (a)(3)(B) and (a)(5) thereof.
An individual shall continue to be treated as an eligible TAA recipient during the first month that such individual would otherwise cease to be an eligible TAA recipient by reason of the preceding sentence.
(3)
Eligible alternative TAA recipient
The term “eligible alternative TAA recipient” means, with respect to any month, any individual who—
(A)
is a worker described in section 246(a)(3)(B) of the Trade Act of 1974 who is participating in the program established under section 246(a)(1) of such Act, and
An individual shall continue to be treated as an eligible alternative TAA recipient during the first month that such individual would otherwise cease to be an eligible alternative TAA recipient by reason of the preceding sentence.
(d)
Qualifying family member
For purposes of this section—
(1)
In general
The term “qualifying family member” means—
(B)
any dependent of the taxpayer with respect to whom the taxpayer is entitled to a deduction under section
151
(c).
Such term does not include any individual who has other specified coverage.
(2)
Special dependency test in case of divorced parents, etc.
If section
152
(e) applies to any child with respect to any calendar year, in the case of any taxable year beginning in such calendar year, such child shall be treated as described in paragraph (1)(B) with respect to the custodial parent (as defined in section
152
(e)(4)(A)) and not with respect to the noncustodial parent.
(e)
Qualified health insurance
For purposes of this section—
(1)
In general
The term “qualified health insurance” means any of the following:
(B)
State-based continuation coverage provided by the State under a State law that requires such coverage.
(C)
Coverage offered through a qualified State high risk pool (as defined in section 2744(c)(2) of the Public Health Service Act).
(E)
Coverage under a State-based health insurance program that is comparable to the health insurance program offered for State employees.
(F)
Coverage through an arrangement entered into by a State and—
(G)
Coverage offered through a State arrangement with a private sector health care coverage purchasing pool.
(H)
Coverage under a State-operated health plan that does not receive any Federal financial participation.
(I)
Coverage under a group health plan that is available through the employment of the eligible individual’s spouse.
(J)
In the case of any eligible individual and such individual’s qualifying family members, coverage under individual health insurance if the eligible individual was covered under individual health insurance during the entire 30-day period that ends on the date that such individual became separated from the employment which qualified such individual for—
(ii)
in the case of an eligible alternative TAA recipient, the benefit described in subsection (c)(3)(B), or
(iii)
in the case of any eligible PBGC pension recipient, the benefit described in subsection (c)(4)(B).
For purposes of this subparagraph, the term “individual health insurance” means any insurance which constitutes medical care offered to individuals other than in connection with a group health plan and does not include Federal- or State-based health insurance coverage.
(K)
In the case of eligible coverage months beginning before February 13, 2012, coverage under an employee benefit plan funded by a voluntary employees’ beneficiary association (as defined in section
501
(c)(9)) established pursuant to an order of a bankruptcy court, or by agreement with an authorized representative, as provided in section
1114 of title
11, United States Code.
(2)
Requirements for state-based coverage
(A)
In general
The term “qualified health insurance” does not include any coverage described in subparagraphs (B) through (H) of paragraph (1) unless the State involved has elected to have such coverage treated as qualified health insurance under this section and such coverage meets the following requirements:
(i)
Guaranteed issue
Each qualifying individual is guaranteed enrollment if the individual pays the premium for enrollment or provides a qualified health insurance costs credit eligibility certificate described in section
7527 and pays the remainder of such premium.
(ii)
No imposition of preexisting condition exclusion
No pre-existing condition limitations are imposed with respect to any qualifying individual.
(B)
Qualifying individual
For purposes of this paragraph, the term “qualifying individual” means—
(i)
an eligible individual for whom, as of the date on which the individual seeks to enroll in the coverage described in subparagraphs (B) through (H) of paragraph (1), the aggregate of the periods of creditable coverage (as defined in section
9801
(c)) is 3 months or longer and who, with respect to any month, meets the requirements of clauses (iii) and (iv) of subsection (b)(1)(A); and
(f)
Other specified coverage
For purposes of this section, an individual has other specified coverage for any month if, as of the first day of such month—
(1)
Subsidized coverage
(A)
In general
Such individual is covered under any insurance which constitutes medical care (except insurance substantially all of the coverage of which is of excepted benefits described in section
9832
(c)) under any health plan maintained by any employer (or former employer) of the taxpayer or the taxpayer’s spouse and at least 50 percent of the cost of such coverage (determined under section
4980B) is paid or incurred by the employer.
(B)
Eligible alternative TAA recipients
In the case of an eligible alternative TAA recipient, such individual is either—
(i)
eligible for coverage under any qualified health insurance (other than insurance described in subparagraph (A), (B), or (F) of subsection (e)(1)) under which at least 50 percent of the cost of coverage (determined under section
4980B
(f)(4)) is paid or incurred by an employer (or former employer) of the taxpayer or the taxpayer’s spouse, or
(g)
Special rules
(1)
Coordination with advance payments of credit
With respect to any taxable year, the amount which would (but for this subsection) be allowed as a credit to the taxpayer under subsection (a) shall be reduced (but not below zero) by the aggregate amount paid on behalf of such taxpayer under section
7527 for months beginning in such taxable year.
(4)
Denial of credit to dependents
No credit shall be allowed under this section to any individual with respect to whom a deduction under section
151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which such individual’s taxable year begins.
(5)
Both spouses eligible individuals
The spouse of the taxpayer shall not be treated as a qualifying family member for purposes of subsection (a), if—
(8)
Treatment of payments
For purposes of this section—
(A)
Payments by Secretary
Payments made by the Secretary on behalf of any individual under section
7527 (relating to advance payment of credit for health insurance costs of eligible individuals) shall be treated as having been made by the taxpayer on the first day of the month for which such payment was made.
(9)
COBRA premium assistance
In the case of an assistance eligible individual who receives premium reduction for COBRA continuation coverage under section 3001(a) of title III of division B of the American Recovery and Reinvestment Act of 2009 for any month during the taxable year, such individual shall not be treated as an eligible individual, a certified individual, or a qualifying family member for purposes of this section or section
7527 with respect to such month.
(10)
1 Continued qualification of family members after certain events
In the case of eligible coverage months beginning before February 13, 2011—
(A)
Medicare eligibility
In the case of any month which would be an eligible coverage month with respect to an eligible individual but for subsection (f)(2)(A), such month shall be treated as an eligible coverage month with respect to such eligible individual solely for purposes of determining the amount of the credit under this section with respect to any qualifying family members of such individual (and any advance payment of such credit under section
7527). This subparagraph shall only apply with respect to the first 24 months after such eligible individual is first entitled to the benefits described in subsection (f)(2)(A).
(B)
Divorce
In the case of the finalization of a divorce between an eligible individual and such individual’s spouse, such spouse shall be treated as an eligible individual for purposes of this section and section
7527 for a period of 24 months beginning with the date of such finalization, except that the only qualifying family members who may be taken into account with respect to such spouse are those individuals who were qualifying family members immediately before such finalization.
(C)
Death
In the case of the death of an eligible individual—
(i)
any spouse of such individual (determined at the time of such death) shall be treated as an eligible individual for purposes of this section and section
7527 for a period of 24 months beginning with the date of such death, except that the only qualifying family members who may be taken into account with respect to such spouse are those individuals who were qualifying family members immediately before such death, and
(ii)
any individual who was a qualifying family member of the decedent immediately before such death (or, in the case of an individual to whom paragraph (4) applies, the taxpayer to whom the deduction under section
151 is allowable) shall be treated as an eligible individual for purposes of this section and section
7527 for a period of 24 months beginning with the date of such death, except that in determining the amount of such credit only such qualifying family member may be taken into account.
[1] So in original. There are two pars. designated “(10)”.