HCTC: Partners - State Departments of Insurance

Eligible individuals must have a qualified health plan to take advantage of the Health Coverage Tax Credit (HCTC). The HCTC Program works with state Departments of Insurance to qualify health plans for the HCTC Program. This page explains how state Departments of Insurance can qualify health plans to participate in the HCTC Program.

How to Qualify Health Plans as State-Qualified Health Plans (SQHPs) for the HCTC Program
As directed by the Trade Act of 2002, states can make state-qualified health plans (SQHPs) available as one of the health coverage options for eligible HCTC recipients. The HCTC Program depends on state governments (Departments of Insurance) to qualify these health plans. When your state has a new qualified health plan option, the state must officially notify the HCTC Program by sending a State Elections Letter to the following address:

Jodi L. Patterson
Director, RICS, Internal Revenue Service
5000 Ellin Road
NCFB - C5-401
Lanham, MD 20706

Four Qualifying Criteria
Under the law governing the HCTC Program, a health plan will only be considered a SQHP if it agrees to four additional consumer protections for HCTC participants:

• The plan must have guaranteed issue, meaning qualifying individuals must be guaranteed enrollment, regardless of their medical status, and they must be permitted to remain enrolled as long as they pay their premium
• No preexisting condition restriction may be imposed on qualifying individuals
• The premium must be a non-discriminatory premium; the premium for a qualifying individual may not be greater than the premium for a similarly situated person who is not receiving the tax credit
• Benefits must be the same (or substantially the same) under coverage provided to similarly situated individuals who are not qualifying individuals

Note: The four consumer protections will only be applied if the person is a "qualifying individual." A qualifying individual is a person with three months or more of credible coverage without a break in coverage of more than 63 consecutive days at the time of their application.

Categories of State-Qualified Health Plans (SQHPs)

The following seven categories of health coverage can be considered as an SQHP if they meet the four qualifying criteria outlined above:

• State-based COBRA or continuation coverage
• Coverage offered through a state high risk pool
• Coverage under a state employees' health insurance program
• A state-based health insurance program that is comparable to the health insurance program offered to state employees
• Other state arrangements with an issuer of health insurance coverage, an administrator, an employer, or a group health plan
• Coverage that is provided through a private sector purchasing pool
• Coverage that is provided through a state-operated health plan that does not receive any federal financial assistance

SQHPs are currently available in most states and the District of Columbia. View a list of the HCTC State-Qualified Health Plans page for a complete list of the current state-qualified health plans.

Note: It may be necessary for your state to pass legislation before qualifying one or more of these options. For example, if your state has a high risk pool with a preexisting condition restriction, then the governance of the high risk pool must be modified in order to meet the criteria for HCTC qualification.

For more information about the HCTC, please contact us.

Return to the Health Plan Administrators and State Depts of Insurance page.

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Go to the HCTC Quick References page to view a glossary of terms, frequently asked questions, and additional resources.