PRIVATE HEALTH 

INSURANCE

Expiration of the 

Health Coverage Tax 

Credit Will Affect 

Participants’ Costs 

and Coverage Choices 

as Health Reform 

Provisions Are 

Implemented

Report to Congressional Requesters

December 2012

GAO-13-147

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-13-147, a report to 

congressional requesters

December 2012

PRIVATE HEALTH INSURANCE

Expiration of the Health Coverage Tax Credit Will 

Affect Participants’ Costs and Coverage Choices as 

Health Reform Provisions Are Implemented

Why GAO Did This Study

The HCTC pays 72.5 percent of health 

plan premiums for certain workers who 

lost their jobs due to foreign import 

competition and for certain retirees 

whose pensions from their former 

employers were terminated and are 

now paid by the Pension Benefit 

Guaranty Corporation. A small share of 

individuals who are potentially eligible 

for the HCTC participate. In 2010 

there were 43,864 participants and 

469,168 nonparticipants. The HCTC 

program will expire at the end of 2013 

when premium tax credits and costsharing subsidies become available to 

eligible individuals who purchase 

health plans through health insurance 

exchanges under PPACA. PPACA also 

expands Medicaid eligibility to 

nonelderly individuals who meet 

specific income requirements to the 

extent that states choose to implement 

this provision. Therefore, the costs for 

health plans and coverage available to 

individuals potentially eligible for the 

HCTC will change when the HCTC 

expires. 

This report examines (1) how the 

HCTC’s expiration and the 

implementation of the PPACA premium 

tax credit, cost-sharing subsidies, and 

Medicaid expansion will affect HCTC 

participants and nonparticipants, and 

(2) how the coverage that will be 

available through the PPACA 

exchanges compares to HCTC 

participants’ health plan coverage. 

GAO analyzed 2010 HCTC program 

data and individual tax filer data. GAO 

also compared the services and 

actuarial values of the plans that will be 

available through the exchanges to 

HCTC plans.

What GAO Found

Expiration of the Health Coverage Tax Credit (HCTC) and implementation of 

Patient Protection and Affordable Care Act (PPACA) premium tax credits, costsharing subsidies, and Medicaid expansion will affect HCTC participants’ costs 

for health plans in multiple ways. Projections from GAO’s analysis of 2010 

Internal Revenue Service (IRS) data show that most HCTC participants in 2014 

will likely be eligible for less generous tax credits under PPACA than the HCTC. 

Specifically, about 69 percent of HCTC participants will likely be ineligible for 

either a PPACA premium tax credit or Medicaid, or they will likely receive a 

PPACA premium tax credit less generous than the HCTC. On the other hand, 

GAO’s analysis also found that at least 23 percent will likely be eligible for 

PPACA premium tax credits more generous than the HCTC. In addition to the 

PPACA premium tax credit, up to 28 percent of all HCTC participants will likely 

be eligible for PPACA cost-sharing subsidies—subsidies that will help them pay 

for deductibles and copays—depending in part on whether or not their state 

expands Medicaid under PPACA. For HCTC nonparticipants, the projections 

from GAO’s analysis of 2010 IRS data show that as many as 30 percent may be 

eligible for either Medicaid or a PPACA premium tax credit more generous than 

the HCTC in 2014, depending in part on whether or not their state expands 

Medicaid and whether they meet all other eligibility criteria for the PPACA 

premium tax credits.

In general, the health plan coverage that will be available through the PPACA 

exchanges will be comparable to coverage in HCTC participants’ current plans; 

however, HCTC participants may have an incentive to choose plans through the 

exchanges that have different levels of coverage than their HCTC plans. Plans 

purchased through the PPACA exchanges will be required to provide essential 

health benefits—including coverage for specific service categories, such as 

ambulatory care, prescription drugs, and hospitalization—and most HCTC plans 

cover these categories of services. In addition, the vast majority of HCTC plans 

in 2012 likely had actuarial values—the expected percentage of costs that a plan 

will incur for services provided to a standard population—above the minimum 

actuarial value of 60 percent that health plans sold through the PPACA 

exchanges will be required to meet. However, because the PPACA premium tax 

credit amount will be based on a plan with an actuarial value of 70 percent, 

HCTC participants who currently have plans with either higher or lower actuarial

values and are eligible for PPACA premium tax credits may have an incentive to 

choose plans that will have different levels of coverage than their HCTC plans. 

For example, those who have HCTC plans with actuarial values that are higher 

than 70 percent may have an incentive to shift to health plans with an actuarial 

value of 70 percent to avoid paying any difference in premiums that could result 

from choosing plans with higher actuarial values. Similarly, those who now have 

plans with actuarial values below 70 percent could have the opposite incentive 

and may purchase plans that offer a higher level of coverage than their current 

HCTC plans.

We provided draft copies of this report to the Department of Health and Human 

Services and IRS for review, and both provided technical comments, which we 

incorporated as appropriate.

View GAO-13-147. For more information, 

contact John Dicken at (202) 512-7114 or 

dickenj@gao.gov.
Page i GAO-13-147 HCTC and PPACA Premium Tax Credits

Letter 1 

Background 9

When the HCTC Expires Most HCTC Participants Will Likely Be 

Ineligible for a PPACA Premium Tax Credit or Eligible for a 

Credit Less Generous Than the HCTC 17

Health Plan Coverage under PPACA Will Be Comparable to HCTC 

Plans, but Participants May Have an Incentive to Change Their 

Level of Coverage 23

Agency Comments 30

Appendix I Characteristics of Health Coverage Tax Credit (HCTC) 

Participants and Nonparticipants in 2010 32

Appendix II GAO Contact and Staff Acknowledgments 34

Related GAO Products 35

Tables

Table 1: Total Number of 2010 HCTC Participants and 

Nonparticipants 10

Table 2: For Individuals Eligible for PPACA Premium Tax Credits, 

the Percentage of Household Income That Will Be Spent 

on Health Care Premiums for Plans Purchased through 

PPACA Exchanges in 2014 13

Table 3: Example of a PPACA Premium Tax Credit in 2014 at Two 

Different Income Levels Based on a Hypothetical 

Reference Plan with a Premium of $10,000 14

Table 4: Percentage of HCTC Participants Who Will Likely Be 

Eligible and Ineligible for a PPACA Premium Tax Credit, 

and Possibly Eligible for Medicaid in 2014 18

Table 5: Actuarial Value of Selected HCTC Plans in Selected States, 

2012 27

Table 6: Number and Percentage of HCTC Participants and 

Nonparticipants by Age Groups in 2010 32

Contents 
Page ii GAO-13-147 HCTC and PPACA Premium Tax Credits

Table 7: Number and Percentage of HCTC Participants and 

Nonparticipants by Household Income Based on the FPL 

in 2010 33

Table 8: Number and Percentage of HCTC Participants and 

Nonparticipants by Eligibility Type in 2010 33

Figures

Figure 1: Comparison of the PPACA Premium Tax Credit to the 

HCTC among HCTC Participants Who Will Likely Be 

Eligible for a PPACA Premium Tax Credit in 2014 19

Figure 2: Comparison of the Percentage of Household Income 

Spent on Premiums with the HCTC to Premiums with a 

PPACA Premium Tax Credit among HCTC Participants 

Who Will Likely Be Eligible for a PPACA Premium Tax 

Credit in 2014 21

Abbreviations

CCIIO Center for Consumer Information and Insurance Oversight

COBRA Consolidated Omnibus Budget Reconciliation Act

EHB essential health benefits

FPL federal poverty level

HCTC Health Coverage Tax Credit

HHS Department of Health and Human Services

IRS Internal Revenue Service

PBGC Pension Benefit Guaranty Corporation

PPACA Patient Protection and Affordable Care Act

RTAA Reemployment Trade Adjustment Assistance

TAA Trade Adjustment Assistance

VEBA Voluntary Employees’ Beneficiary Association

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Page 1 GAO-13-147 HCTC and PPACA Premium Tax Credits

United States Government Accountability Office

Washington, DC 20548

December 28, 2012

The Honorable Max Baucus 

Chairman

Committee on Finance

United States Senate

The Honorable John D. Rockefeller, IV

Chairman

Subcommittee on Health Care

Committee on Finance

United States Senate

The health coverage tax credit (HCTC) pays a share of health plan 

premiums for certain workers who lost their jobs because of foreign 

import competition and who are eligible for benefits in the Trade 

Adjustment Assistance (TAA) program and for certain retirees age 55 and 

over whose pensions from a former employer were terminated and are 

now paid by the Pension Benefit Guaranty Corporation (PBGC). The 

Trade Adjustment Assistance Reform Act of 2002 established the HCTC, 

which is administered by the Internal Revenue Service (IRS).1 The Trade 

Adjustment Assistance Extension Act of 2011 increased the HCTC from 

65 percent to 72.5 percent of health plan premiums and also specified 

that the HCTC program will expire at the end of 2013.2 Beginning 

January 1, 2014, premium tax credits and cost-sharing subsidies—

subsidies that will help individuals pay for out-of-pocket expenses such as 

deductibles and copays—will become available under the Patient 

Protection and Affordable Care Act (PPACA).3

 

1

Pub. L. No. 107-210, div. A, § 201, 116 Stat. 935, 954. The HCTC was applicable to tax 

years beginning in 2002.

These tax credits and 

subsidies will help eligible individuals pay for the premiums and costsharing for health plans purchased through health insurance exchanges 

2

Pub. L. No. 112-40, title II, § 241, 125 Stat. 402, 418. The increased credit rate was 

applicable to coverage months beginning after February 12, 2011.

3

See Pub. L. No. 111-148, title I, subtitles D and E, title X, subtitle A, §§ 10104, and 

10105, 124 Stat. 119, 162, 213, 896, 906 (2010), as amended by the Health Care and 

Education Reconciliation Act of 2010, Pub. L. No. 111-152, title I, subtitle A, 124 Stat. 

1029, 1030. For purposes of this report, references to PPACA include the amendments 

made by the Health Care and Education Reconciliation Act of 2010.

 
 

Page 2 GAO-13-147 HCTC and PPACA Premium Tax Credits

created under PPACA.4 Effective January 1, 2014, PPACA also expands 

eligibility for Medicaid to nonelderly individuals who meet specific income 

requirements to the extent that states choose to implement this 

provision.5

Although the HCTC pays a significant share of health plan premiums for 

eligible individuals who participate in the program, participation in the 

HCTC has been lower than expected. For example, in 2010 less than 

10 percent of over 500,000 potentially eligible individuals were 

participating in the HCTC. In our prior work, we analyzed data from IRS 

surveys conducted in 2009 of individuals who were potentially eligible for 

the HCTC.

As a result, individuals who participate in or were potentially 

eligible for the HCTC may be eligible for Medicaid when the HCTC 

expires. The IRS will administer the PPACA premium tax credits and the 

Department of Health and Human Services’ (HHS) Center for Consumer 

Information and Insurance Oversight (CCIIO) will oversee the PPACA 

exchanges and cost-sharing subsidies.

6

 

4

An exchange is a mechanism for organizing the health insurance marketplace to help 

consumers and small businesses shop for health insurance plans and compare available 

plan options based on price, benefits, and quality. Throughout this report we refer to these 

as PPACA exchanges.

We found that survey respondents most commonly reported 

improved affordability of health plans as a reason for participation in the 

HCTC and most commonly reported ineligibility as a reason for not 

5

Pub. L. No. 111-148, §§ 2001, 10201(c), 124 Stat. 271, 1051, as amended by Pub. L. 

No. 111-152 § 1201, 124 Stat. 1051. Eligibility for Medicaid varies by state. However, in 

most states, nondisabled childless adults are not currently eligible for Medicaid regardless 

of age or level of income. Under the Medicaid program, failure by a state to comply with 

federal requirements may result in a termination of federal Medicaid matching funds. 

However, the U.S. Supreme Court has ruled that states choosing not to expand Medicaid 

coverage to this group of individuals will forgo only the federal matching funds associated 

with such expanded coverage. See National Federation of Independent Business, et al., 

vs. Sebelius, Sec. of Health and Human Services, et al., 567 U.S. ___, 2012 WL 2427810 

(U.S. June 28, 2012).

6

See GAO, Health Coverage Tax Credit: Participation and Administrative Costs, 

GAO-10-521R (Washington, D.C.: Apr. 30, 2010).
 

Page 3 GAO-13-147 HCTC and PPACA Premium Tax Credits

participating.7

To receive the HCTC, recipients must be enrolled in HCTC-qualified 

health plans.

The second most commonly reported reason for not 

participating was lack of affordability—such as being unable to afford to 

pay for health plan premiums even with the credit. While HCTC 

nonparticipants do not currently benefit from the HCTC, some may benefit 

from PPACA. That is, some may have new incentives to obtain health 

coverage under PPACA rules, for example if they are eligible for the 

PPACA premium tax credit, and particularly if they are eligible for a credit 

that is more generous than the HCTC. In addition, some nonparticipants 

may be eligible for PPACA cost-sharing subsidies or become newly 

eligible for Medicaid.

8 These include certain group health plans, such as plans 

that are a continuation of employer-sponsored health plans through the 

Consolidated Omnibus Budget Reconciliation Act (COBRA)—referred to 

as COBRA plans throughout this report—and Voluntary Employees’ 

Beneficiary Association (VEBA) plans.9

 

7

There are several reasons why individuals who are identified as potentially eligible may 

ultimately be ineligible for the HCTC. One reason is that HCTC eligibility is conditioned on 

the individual not having “other specified coverage,” which is defined to include coverage 

under Medicare, Medicaid, or the state Children’s Health Insurance Program. 26 U.S.C.

§ 35 (b)(1)(A)(iii), (f). Medicare is the federally financed health care program for persons 

65 years of age or over as well as for certain individuals with disabilities and individuals 

with end-stage renal disease. Medicaid and the state Children’s Health Insurance 

Program are joint federal-state programs that finance health care for certain categories of 

low-income individuals.

The HCTC-qualified health plans 

also include individual (nongroup) market plans and HCTC state-qualified 

plans, which can vary in design, but which must ensure certain consumer 

protections. Similarly, to receive PPACA premium tax credits and costsharing subsidies when they become available in 2014, recipients must 

be enrolled in health plans that are purchased through the PPACA 

exchanges. These plans will need to meet certain coverage requirements. 

Specifically, they will be required to provide essential health benefits 

(EHB) which include coverage for specific service categories, such as 

8

26 U.S.C. § 35(a), (e).

9

VEBAs may be established through bankruptcy court to provide certain specified 

benefits, including group health benefits, and are generally similar to employer-sponsored 

health plans. Group coverage obtained through a spouse’s current or former employer 

may also be HCTC-qualified, with certain restrictions.
 

Page 4 GAO-13-147 HCTC and PPACA Premium Tax Credits

hospitalization, prescription drugs, and emergency services.10 A plan will 

be identified in each state that specifies what the EHB are for that state—

this plan will be referred to as that state’s benchmark plan. In addition, 

plans sold through the PPACA exchanges will be offered at four different 

levels of coverage corresponding to a percentage of the full actuarial 

value of plan benefits for EHB and designated by a different metal tier: 

60 percent (bronze), 70 percent (silver), 80 percent (gold), and 90 percent 

(platinum).11

Because the HCTC will expire when the PPACA premium tax credit and 

cost-sharing subsidies become available for health plans purchased 

through the PPACA exchanges and the PPACA Medicaid expansion 

takes effect, the costs for health coverage and the health plan options at 

that time will change for individuals who are currently participating in or 

who were potentially eligible for the HCTC. You asked us to examine 

issues related to the expiration of the HCTC and its interaction with the 

PPACA premium tax credit, cost-sharing subsidies, and expansion of 

Medicaid. Specifically, this report addresses (1) How the expiration of the 

HCTC and the implementation of the PPACA premium tax credit, costsharing subsidies, and Medicaid expansion will affect HCTC participants 

and nonparticipants, and (2) how the coverage that will be available for 

plans purchased through the PPACA exchanges compares to HCTC 

participants’ HCTC-qualified health plans’ coverage.

For the purposes of this report, the term “coverage” includes 

two elements: (1) the categories of services a plan covers; and (2) a 

plan’s actuarial value, which we refer to as a plan’s level of coverage.

 

10Pub. L. No. 111-148, §§ 1301, 1302, 1311, 1321, 10104, 124 Stat. 162, 163, 173, 186, 

896.

11Pub. L. No. 111-148, §§ 1302 (d)(2), 10104(b)(1), 124 Stat. 167, 896. Accordingly, the 

actuarial value of a plan represents the expected percentage of costs the plan will incur for 

the EHB services provided to a standard population. For example, a gold plan with an 

80 percent actuarial value would be expected to pay, on average, 80 percent of a 

standard population’s expected medical expenses for the EHB. The individuals covered by 

the plan would be expected to pay, on average, the remaining 20 percent of the expected 

cost-sharing expenses in the form of deductibles, copayments, and coinsurance.
 

Page 5 GAO-13-147 HCTC and PPACA Premium Tax Credits

To determine how the expiration of the HCTC and implementation of the 

PPACA premium tax credit, cost-sharing subsidies, and Medicaid 

expansion will affect HCTC participants and nonparticipants,12 we 

analyzed 2010 IRS HCTC program data and individual tax filer data for 

HCTC participants, which were the most current data available. For the 

PPACA premium tax credit and the cost-sharing subsidies, we made 

projections assuming that HCTC participants would meet many of the key 

eligibility criteria—namely that they would not be eligible for Medicare or 

Medicaid and would not be enrolled in health plans in which employers 

paid for the majority of the premium amounts. Using these data, we 

determined whether each HCTC participant would be eligible for a 

PPACA premium tax credit on the basis of their household income13 and, 

if eligible, estimated the amount of that PPACA premium tax credit. We 

compared the estimated PPACA premium tax credit amounts to the 

estimated HCTC amounts for each participant.14

 

12For the purposes of our analysis we assumed that individuals in all states could 

potentially be eligible for PPACA premium tax credits, consistent with the final rule issued 

by IRS. See Health Insurance Premium Tax Credit, preamble 1.f and regulations to be 

codified at 26 C.F.R. §§ 1.36B-0 et seq., 77 Fed. Reg. 30377, 30378, 30385 (May 23, 

2012). In addition, we limited our analysis of participants who will likely be eligible for costsharing subsidies to those earning up to 250 percent of the federal poverty level (FPL), 

consistent with CCIIO guidance. See Center for Consumer Information and Insurance 

Oversight, Actuarial Value and Cost-Sharing Reductions Bulletin (Feb. 24, 2012).

We also calculated the 

percentage of income in 2010 that HCTC participants paid for their share 

of premiums after the HCTC was applied, and compared these amounts 

to the estimated percentage of their income they will likely pay for 

premiums with the PPACA premium tax credit assuming their incomes 

would remain constant. We also used these data to estimate the 

13Household income was calculated by summing the income of each participant with the 

incomes of each participant’s spouse and dependents.

14These estimates are from estimated annualized HCTC premiums for all HCTC 

participants. Participants can receive the HCTC in two ways: yearly as a tax credit when 

they file their federal income tax returns, or monthly as an advance payment directly to 

their health plans when their premiums are due each month. Data on HCTC monthly 

participants included monthly 2010 HCTC amounts, which we used to calculate 

annualized HCTC premiums. We calculated an estimated annualized HCTC premium for 

monthly participants who did not receive the HCTC for all 12 months in 2010. To calculate 

the estimated annualized HCTC premiums for yearly participants, we used available data 

on premium amounts from monthly HCTC participants and calculated a state average in 

the states in which these monthly participants lived in 2010. The state average estimate 

was applied to yearly participants according to the state in which they lived in 2010. We 

also used these estimated annualized HCTC premiums as the basis for our estimation of 

the PPACA premium tax credit amounts.
 

Page 6 GAO-13-147 HCTC and PPACA Premium Tax Credits

percentage of HCTC participants who will likely be eligible for PPACA 

cost-sharing subsidies and the number and percentage of participants 

who will likely be eligible for Medicaid, depending in part on whether or 

not their state expands Medicaid. We excluded from our analyses any 

participants and nonparticipants aged 65 or older at any point in 2010 

because they would have likely been eligible for Medicare and therefore 

ineligible for either the HCTC, a PPACA premium tax credit, or PPACA 

cost-sharing subsidies. We conducted the same analyses for HCTC 

nonparticipants as we did for the HCTC participants using 2010 IRS 

data.15

To determine how the coverage that will be available through the PPACA 

exchanges compares to the qualified health plans for HCTC participants 

for each HCTC plan type—COBRA, HCTC state-qualified, VEBA, and 

individual market—we compared the services that plans purchased 

through the PPACA exchanges will cover, and actuarial values that plans 

will be offered at through the exchanges, to the services and actuarial 

values of HCTC-qualified plans. Since COBRA plans are an extension of 

However, we did not make the same assumption that most 

nonparticipants would meet many of the key eligibility criteria for the 

PPACA premium tax credit or cost-sharing subsidies because we could 

not determine why these individuals did not participate in the HCTC. For 

example, nonparticipants may have been enrolled in health plans paid for 

by an employer, which would make them ineligible for a PPACA premium 

tax credit or cost-sharing subsidy. In light of this, our ability to draw 

conclusions based on our analysis of the data on HCTC nonparticipants 

was more limited than it was for HCTC participants. We also reviewed 

regulations, guidance, and selected literature on the PPACA premium tax 

credit and cost-sharing subsidies. To determine the reliability of IRS’s 

2010 HCTC program data and individual tax filer data, we reviewed 

relevant documentation, conducted interviews with IRS officials 

knowledgeable about the data, and conducted electronic testing of the 

data to identify obvious errors or outliers. We determined that the data 

were sufficiently reliable for purposes of this report.

 

15We also calculated an estimated annualized HCTC premium for HCTC nonparticipants 

using available data on premium amounts from monthly HCTC participants in the states in 

which these monthly participants lived in 2010. The state average estimate was applied to 

nonparticipants according to the state in which they lived in 2010. We used these 

estimated annualized HCTC premiums as the basis for our estimation of the PPACA 

premium tax credit amounts. In addition, we limited our analysis of nonparticipants who 

will likely be eligible for cost-sharing subsidies to those earning up to 250 percent of the 

FPL, consistent with the 2012 CCIIO bulletin on cost-sharing reductions.
 

Page 7 GAO-13-147 HCTC and PPACA Premium Tax Credits

employer-sponsored health plans, we based our comparison on existing 

data on the services covered by,16 and the actuarial values of, employersponsored health plans.17 For HCTC state-qualified plans, we used 2011 

IRS HCTC program data to select a nongeneralizable sample of four 

states to compare the services covered by the plans that will likely be 

available through the PPACA exchanges in those states, and the 

actuarial values at which plans will be offered through the exchanges, to 

the services covered by and the actuarial values of, selected HCTC statequalified plans.18 The four states selected—California, Michigan, North 

Carolina, and Ohio—were among the states with the largest number in 

2011 of both individuals potentially eligible for the HCTC and HCTC 

monthly participants; were geographically varied; and offered different 

types of HCTC state-qualified plans.19 In each state we identified the 

state’s likely EHB benchmark plan and the HCTC state-qualified plan with 

the largest enrollment for our comparison.20 In California and Michigan we 

used the benchmark plans that those states selected, and in the other two 

states we used the largest small group health plan in each state as the 

potential exchange benchmark plan because HHS has proposed this as 

the default exchange benchmark if the state does not choose a 

benchmark plan.21

 

16Department of Labor, Selected Medical Benefits: A Report From the Department of 

Labor to the Department of Health and Human Services (Washington, D.C.: April 2011).

In certain states, choosing an existing small group 

health plan as a benchmark may lead to lower costs for the state than if it 

17Department of Health and Human Services, Office of the Assistant Secretary for 

Planning and Evaluation, Actuarial Value and Employer-Sponsored Insurance

(Washington, D.C.: November 2011).

18We used 2011 IRS HCTC program data to select the states because 2011 was the most 

recent year of data available regarding the types of HCTC-qualified plans that participants 

have.

19In 2011, the four selected states combined represented 28 percent of all individuals 

potentially eligible for the HCTC and 34 percent of all monthly participants. At the time of 

our analysis, data on yearly participants for 2011 were not yet available, so we selected 

states with the highest numbers of individuals potentially eligible for the HCTC and 

monthly participants in 2011.

20Throughout this report we refer to these plans as potential exchange benchmark plans.

21Patient Protection and Affordable Care Act; Standards Related to Essential Health 

Benefits, Actuarial Value, and Accreditation, 77 Fed. Reg. 70644, 70670 (proposed 

Nov. 26, 2011) (to be codified at 45 C.F.R. § 156.100(c)). The term “small group” is used 

to describe health plans offered by employers with 100 or fewer employees.
 

Page 8 GAO-13-147 HCTC and PPACA Premium Tax Credits

chose a different plan.22 In the four states, we reviewed health plan 

documents and interviewed health plan officials from the four potential 

exchange benchmark plans and the four selected HCTC state-qualified 

plans.23 For VEBA plans, we analyzed the HCTC data from the selected 

states to identify the VEBA plan that had the largest number of HCTC 

participants. We reviewed health plan documents and interviewed health 

plan officials for the selected VEBA plan and compared the services 

covered by the potential exchange benchmark for the state that contained 

the majority of the VEBA plan’s HCTC enrollees to the services covered 

by the VEBA plan. We also compared the actuarial values at which plans 

will be offered through the exchanges to the actuarial value of the VEBA 

plan. For individual market plans, we used available data on this type of 

plan to compare the services covered by,24 and the actuarial value of, 

plans purchased through the PPACA exchanges to individual market 

plans.25

 

22States will be required to defray the costs of state-mandated benefits in addition to EHB. 

See Pub. L. No. 111-148, § 1311(d)(3)(B),124 Stat. 176. However, HHS has proposed 

that a state not be required to defray the costs of state-mandated benefits enacted on or 

before December 31, 2011 as they would be considered EHB. See, 77 Fed. Reg. 70644, 

70647, 70668 (to be codified at 45 C.F.R. § 155.170(a)(2)). Because small group plans 

are typically subject to many of a state’s mandated benefits, states may be more likely to 

choose a small group plan as their benchmark plan.

We also reviewed regulations and guidance on EHB, actuarial 

value, and other insurance market reforms that may affect premiums and 

cost-sharing in 2014. To determine the reliability of IRS’s 2011 HCTC 

program data, we reviewed relevant documentation, interviewed officials 

knowledgeable about the data, and conducted electronic testing of the 

data to identify obvious errors or outliers. To assess the reliability of the 

available data on employer-sponsored health plans and individual market 

health plans, we reviewed the methodologies used to collect and report 

these data. Using these methods, we determined that the data were 

sufficiently reliable for the purposes of this report.

23We reviewed health plan documents for the 2012 plan year for the HCTC state-qualified 

plans and potential exchange benchmark plans which were the most current data 

available. We also used 2012 plan documents for the VEBA plan we reviewed.

24Department of Health and Human Services, Office of the Assistant Secretary for 

Planning and Evaluation, Essential Health Benefits: Individual Market Coverage

(Washington, D.C.: December 2011). 

25Jon.R Gabel et al., “More Than Half of Individual Health Plans Offer Coverage That Falls 

Short Of What Can Be Sold Through Exchanges As of 2014,” Health Affairs, vol. 31, no 6 

(Bethesda, Md.: June 2012).
 

Page 9 GAO-13-147 HCTC and PPACA Premium Tax Credits

We conducted this performance audit from November 2011 to November 

2012 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

The HCTC, which pays a portion of health plan premiums for certain 

eligible workers and retirees, is set to expire at the end of 2013 when 

certain PPACA provisions, including PPACA premium tax credits, costsharing subsidies, and expansion of Medicaid eligibility, are implemented.

The HCTC program is administered by the IRS and currently pays for 

72.5 percent of health plan premiums for HCTC participants. The amount 

of the credit is based solely on the participant’s health plan premium 

amount and is not based on other factors, such as the participant’s 

income. As an example of the credit, an HCTC participant with an annual 

premium of $10,000 would receive a credit of $7,250. Individuals 

potentially eligible for the HCTC include manufacturing and service 

workers who lost their jobs due to foreign import competition and were 

eligible for TAA benefits (representing about 51 percent of all potentially 

eligible individuals),26 and certain retirees between the ages of 55 and 64 

whose pensions from a former employer were terminated and are now 

paid by the PBGC (representing about 47 percent of all potentially eligible 

individuals).27

 

26Within the TAA program, there is a Reemployment Trade Adjustment Assistance 

(RTAA) program. The RTAA program provides a wage subsidy to workers aged 50 years 

or older who have lost their jobs because of foreign import competition and have accepted 

a job where they earn less money than they did at their prior job. Throughout this report, 

any reference to TAA eligible individuals includes both TAA and RTAA eligible individuals.

27About 1 percent of individuals potentially eligible for the HCTC have multiple eligibility 

types—they are eligible both through receiving TAA benefits and because their pensions 

are now paid by PBGC—and for about less than 1 percent, HCTC eligibility type could not 

be identified.

Background 

HCTC
 

Page 10 GAO-13-147 HCTC and PPACA Premium Tax Credits

We have previously reported that many potentially eligible individuals do 

not participate in the HCTC program. In 2010, less than 10 percent of 

those potentially eligible for the program participated in the HCTC (see 

table 1). Some of the potentially eligible individuals may in fact not be 

eligible for the HCTC, for example if they are eligible for Medicare or 

Medicaid, or if they are covered by their spouse’s employer-sponsored 

health plan under certain conditions. Others may choose not to 

participate, for example if even with the HCTC they still cannot afford the 

cost of their share of health plan premiums.

Table 1: Total Number of 2010 HCTC Participants and Nonparticipants

Participation category Number of individuals

Number of HCTC participants 43,864

Number of HCTC nonparticipants 469,168

Total number of potentially eligible individuals 513,032

Source: GAO analysis of IRS data.

HCTC participants obtain coverage from HCTC-qualified health plans, 

which include COBRA plans,28 HCTC state-qualified plans,29 VEBA 

 

28COBRA in general requires employers that offer group health plans (i.e., employersponsored health plans) and have 20 or more employees to make health insurance 

available for a limited period of time for employees and their dependents who have lost 

health insurance because of certain events, including the loss of employment. Former 

employees who opt to continue their coverage through COBRA are responsible for the full 

cost of the health plan premium and the administrative costs for the continuation of 

coverage (not to exceed 102 percent of the applicable premium for such period). See 

29 U.S.C. §§ 1161-1168.

29HCTC state-qualified plans are health plans designated by each state’s department of 

insurance. A state-qualified plan may be a private health insurance plan offered by a 

company or a public health insurance plan offered by a state (e.g., state high-risk pool). 

These plans must offer certain statutorily defined consumer protections.
 

Page 11 GAO-13-147 HCTC and PPACA Premium Tax Credits

plans,30 and individual market plans.31 In 2011, the majority of HCTC 

participants received coverage from COBRA plans (46 percent) or HCTC 

state-qualified plans (37 percent).32 A smaller proportion of HCTC 

participants received coverage from VEBA plans (10 percent) or 

individual market plans (1 percent).33

Beginning on January 1, 2014, a premium tax credit will be available to 

help eligible tax filers and their dependents pay for qualified health plans 

purchased through the PPACA exchanges, to be administered by the 

IRS.34 PPACA premium tax credits will be calculated using income 

reported on tax returns.35

 

30VEBAs may be established for individuals who have an employment-related common 

bond (e.g., common employer, coverage under one or more collective bargaining 

agreements, etc.) through a bankruptcy court to provide certain specified benefits, 

including health benefits, to their members or their members’ designated beneficiaries. 

VEBAs can provide health plan benefits in place of COBRA and retiree benefits. Coverage 

under a VEBA may receive consideration for HCTC purposes only for eligible coverage 

months beginning before February 13, 2012.

The credits will generally be available to eligible 

tax filers and their dependents who are (1) enrolled in one or more 

qualified health plans through a PPACA exchange, and (2) not eligible for 

minimum essential coverage other than coverage in the individual 

31Group coverage obtained through a spouse’s current or former employer may also be 

HCTC-qualified, with certain restrictions. Certain types of health plans do not qualify for 

the HCTC, including the Federal Employees Health Benefits plans, stand-alone dental or 

vision plans, and long-term care benefits; or coverage for only a specified disease or 

illness. HCTC candidates enrolled in these plans would not be eligible for the HCTC.

32Data on the HCTC plan types of the 2011 yearly participants were not available, so all of 

the percentages are based on the HCTC plan types of the 2011 monthly participants.

33About 6 percent of monthly participants in 2011 had multiple types of HCTC plans, 

which means that they may have changed plans during the year, such as switching from a 

COBRA plan to a HCTC state-qualified plan.

34See Pub. L. No. 111-148, title I, subtitles D and E, title X, subtitle A, §§ 10104 

and 10105, 124 Stat. 162, 213, 896, 906, as amended by Pub. L. No. 111-152, title I, 

subtitle A, 124 Stat. 1030. See also 26 C.F.R. §§ 1.36B-0 et seq.

35Therefore, the PPACA premium tax credits can only be obtained by eligible individuals 

who file tax returns.

Selected PPACA 

Provisions 
 

Page 12 GAO-13-147 HCTC and PPACA Premium Tax Credits

market.36 For example, individuals would not be eligible if they had 

coverage in a government program, such as Medicare or Medicaid, or 

certain employer-sponsored coverage.37

Tax filers eligible for PPACA premium tax credits will be those with 

household incomes from 100 percent to 400 percent of the federal 

poverty level (FPL) for the tax year in which they are receiving the 

PPACA premium tax credit.38 The amount of the PPACA premium tax 

credit will vary by household income level, family size, and other factors. 

It will subsidize a portion of the tax filer’s health insurance premiums.39

The tax filer’s contribution to premiums will be based on their household 

income relative to the FPL, and will range from 2 percent of their 

household income for those with household incomes from 100 percent to 

less than133 percent of the FPL, to 9.5 percent of household income for 

those with household incomes from 300 percent up to 400 percent of the 

FPL (see table 2).

 

3626 C.F.R. § 1.36B-2 (2012). “Minimum essential coverage” includes health plans such 

as individual market health plans, eligible employer-sponsored health plans (if they meet 

affordability and quality standards), or government-sponsored health coverage such as 

Medicare, Medicaid, and the Children’s Health Insurance Program. See 26 U.S.C. 

§ 5000A(f).

37PPACA also requires that individuals, subject to certain exceptions, obtain minimum 

essential health insurance coverage or pay a tax penalty. Pub. L. No. 111-148, 

§§ 1501(b), 10106(b), 124 Stat. 244, 909, as amended by Pub. L. No. 111-152, § 1002, 

124 Stat. 1032. Exceptions may be available for certain individuals, such as those who 

cannot afford coverage or have been determined to have suffered hardships, members of 

Indian tribes, and those who qualify for religious reasons.

38Individuals who are eligible for Medicaid, Medicare, or other minimum essential 

coverage may purchase a policy through a PPACA exchange but will not be eligible for 

coverage subsidized by the PPACA premium tax credits, regardless of their household 

income.

39Household income is defined as the sum of a tax filer’s modified adjusted gross income 

(i.e., adjusted gross income increased by amounts from tax-exempt interest, foreign 

earned income, and untaxed social security benefits) and the aggregate modified adjusted 

gross income of all other individuals for whom the tax filer is allowed a deduction for a 

personal exemption and who are required to file their own income tax returns for that 

taxable year.
 

Page 13 GAO-13-147 HCTC and PPACA Premium Tax Credits

Table 2: For Individuals Eligible for PPACA Premium Tax Credits, the Percentage of 

Household Income That Will Be Spent on Health Care Premiums for Plans 

Purchased through PPACA Exchanges in 2014

Household income level based on FPL 

(percent of FPL)

Percentage of income spent 

on health care premiums 

(percent of household income)

100 percent to less than 133% 2.0%

At least 133 but less than 150 3.0–4.0

At least 150 but less than 200 4.0–6.3

At least 200 but less than 250 6.3–8.05

At least 250 but less than 300 8.05–9.5

At least 300 and up to 400 9.5

Source: IRS and 26 C.F.R. §§ 1.36B-2(b), 1.36B-3(g)(2) (2012). 

Eligibility for PPACA premium tax credits by household income level 

based on the FPL may vary by state because states may choose not to 

expand eligibility for Medicaid to nonelderly individuals whose household 

income does not exceed 133 percent of the FPL.40

 

40In determining Medicaid income eligibility, PPACA requires an income equivalent to 

5 percent of the FPL to be disregarded from an individual’s income. Therefore, the 

threshold for Medicaid eligibility will effectively increase from 133 percent of the FPL to 

138 percent of the FPL in states that expand Medicaid. Accordingly, we refer to the 

Medicaid upper income threshold as up to 138 percent of the FPL. From 2014 through 

2016, the federal government will pay 100 percent of the cost of providing coverage to 

individuals who are newly eligible for Medicaid in the states that opt to expand Medicaid. 

Starting in 2017, the federal government will gradually reduce its share each year until 

2020 when it reaches 90 percent, which is the percentage it will pay thereafter.

Under the PPACA 

rule, tax filers with household incomes from 100 percent of the FPL and 

up to 400 percent of the FPL will be eligible for PPACA premium tax 

credits. However, also under the PPACA rule, in states that expand 

Medicaid, individuals with household incomes from 100 percent and up to 

138 percent of the FPL will be eligible for Medicaid and therefore 

ineligible for PPACA premium tax credits. Further, in states that do not 

expand Medicaid, individuals with household incomes from 100 percent 

and up to 400 percent of the FPL will be eligible for PPACA premium tax 

credits, and individuals with household incomes less than 100 percent of 

the FPL will not be eligible for PPACA premium tax credits and may not 
 

Page 14 GAO-13-147 HCTC and PPACA Premium Tax Credits

be eligible for Medicaid, depending on their states’ Medicaid eligibility 

criteria.41

The applicable household income level expressed as a percent of the 

FPL determines an individual’s share of his or her annual premium. The 

amount of the premium for the second-lowest-cost silver plan in the 

PPACA exchange available in the state where the eligible individual 

resides will be the reference for calculating the amount of the PPACA 

premium tax credit.42

Table 3: Example of a PPACA Premium Tax Credit in 2014 at Two Different Income Levels Based on a Hypothetical Reference 

Plan with a Premium of $10,000

See table 3 for an example of a PPACA premium 

tax credit for two different people, both in a family of four, one with a 

household income at 150 percent of the FPL, and the other with a 

household income at 300 percent of the FPL, using a hypothetical annual 

premium of $10,000 for the second-lowest-cost silver plan (reference 

plan) in the PPACA exchange available in the state where they reside.

Tax filer’s share for annual premium amount

Household income 

(percentage of FPL)

Hypothetical annual 

premium amount

Annual PPACA 

premium tax credit

Percentage of 

household income Dollar amount

$33,075 (150% FPL) $10,000 $8,677 4% $1,323

66,150 (300) 10,000 3,716 9.5 6,284

Source: GAO. 

Note: Example is based on 2010 FPLs for the contiguous 48 states and the District of Columbia for a 

family size of four.

 

41Individuals’ eligibility for Medicaid depends on their states’ current Medicaid eligibility 

standards. According to a recent report by the Kaiser Family Foundation, Medicaid 

eligibility for adults, including parents, is very limited in most states. The report found that 

in 17 states, the eligibility level for parents is below 50 percent of the FPL and nondisabled 

childless adults are typically not eligible for Medicaid regardless of their income level. See 

Kaiser Commission on Medicaid and the Uninsured. How Will the Medicaid Expansion for 

Adults Impact Eligibility and Coverage (Washington, D.C.: Kaiser Family Foundation, July 

2012).

42If an individual chooses a more expensive plan than the reference plan (the secondlowest-cost-silver plan), the PPACA premium tax credit will not change and the individual 

will be responsible for the additional premium amount. If he or she chooses a plan with a 

less expensive premium than the reference plan, the individual will still be eligible to 

receive a PPACA premium tax credit up to the amount calculated based on the premium 

for the reference plan, which would reduce the amount of premium expenses the 

individual would have to pay.
 

Page 15 GAO-13-147 HCTC and PPACA Premium Tax Credits

Enrollees may also be eligible for separate, PPACA cost-sharing 

subsidies to help reduce their out-of-pocket expenses such as 

deductibles and copays.43 However, as with the PPACA premium tax 

credits, tax filers will not be eligible for PPACA cost-sharing subsidies if 

they are eligible for Medicaid in their state. PPACA cost-sharing subsidies 

will reduce the maximum out-of-pocket limit for eligible individuals (not 

including health plan premiums).44 For example, had the limits been in 

place in 2010, an eligible individual with an income of 150 percent of the 

FPL would have had his or her maximum out-of-pocket limit reduced by 

two-thirds. Therefore, the individual’s maximum out-of-pocket limit would 

have been about $1,981 instead of $5,950 for single coverage.

PPACA provides for the establishment and operation of exchanges in 

each state that will provide competitive marketplaces for qualified 

individuals45 and small employers46 to directly compare and purchase 

available private health insurance plans by January 1, 2014.47

PPACA requires that health plans purchased through the PPACA 

exchanges offer services in each of the following EHB categories:

• ambulatory patient services;

 

43See Pub. L. No. 111-148, § 1402, 124 Stat.220, as amended by Pub. L. No. 111-152, 

§ 1001(b), 124 Stat. 1031.

44If these maximum out-of-pocket limits had been in place in 2010 they would have been 

$5,950 for an individual and $11,900 for a family. These out-of-pocket limits are updated 

annually, so when these limits become effective in 2014 they will likely be different than 

what they would have been in 2010.

45Qualified individuals include U.S. citizens and lawful residents who are not incarcerated.

46Small Business Health Options Program exchanges, which are separate from the 

exchanges offering qualified health plans to individuals, are designed to help small 

businesses with up to 100 employees obtain a plan offered in the small group market in 

the state for their employees. States may also elect to provide only one exchange for both 

qualified individuals and small employers if the exchange has adequate resources. Our 

study focuses on exchanges that will offer health insurance options in the individual 

market.

47HHS will establish and operate exchanges within states not electing to establish an 

exchange or that will not have an exchange operational by January 1, 2014. Pub. L. 

No. 111-148, § 1321(c), 124 Stat. 186. HHS will consider an exchange fully operational if 

it is capable of beginning operations by October 1, 2013 to support the initial open 

enrollment period.

PPACA Exchanges
 

Page 16 GAO-13-147 HCTC and PPACA Premium Tax Credits

• emergency services;

• hospitalization;

• maternity and newborn care;

• mental health and substance use disorder services, including 

behavioral health treatment;

• prescription drugs;

• rehabilitative and habilitative services and devices;

• laboratory services;

• preventive and wellness services and chronic disease management; 

and

• pediatric services, including oral and vision care.

CCIIO will oversee the implementation and operation of the exchanges, 

including the provision of guidance on EHB categories and the actuarial 

value of plans purchased through the PPACA exchanges. Because each 

state will have its own benchmark plan, EHB services may vary by 

state.48

• bronze: plans that have actuarial values of 60 percent,

Health plans will be offered at four levels of actuarial value 

through the exchanges and designated by different metal tiers. These 

levels of coverage will allow individuals purchasing a plan to compare 

what the potential differences in out-of-pocket expenses would be for 

each plan. The four metal tiers include the following:

• silver: plans that have actuarial values of 70 percent,

• gold: plans that have actuarial values of 80 percent, and

 

48See 77 Fed. Reg. 70644, 70669 (to be codified at 45 C.F.R. Part 156, Subpart B).
 

Page 17 GAO-13-147 HCTC and PPACA Premium Tax Credits

• platinum: plans that have actuarial values of 90 percent.49

The expiration of the HCTC and implementation of the PPACA premium 

tax credits and Medicaid expansion will affect HCTC participants’ costs 

for health plans in multiple ways. Projections from our analysis of 2010 

IRS data show that about 69 percent of HCTC participants will likely 

either be ineligible for a PPACA premium tax credit or Medicaid, or will be 

eligible for a PPACA premium tax credit that is less generous than the 

HCTC. These projections show that about 37 percent of HCTC 

participants will likely be ineligible for either a PPACA premium tax credit 

or Medicaid because their incomes are too high, and 32 percent will be 

eligible for a PPACA premium tax credit less generous than the HCTC. 

On the other hand, at least 27 percent of HCTC participants will be 

eligible for a PPACA premium tax credit more generous than the HCTC or 

be eligible for Medicaid. An additional 3 percent of all participants will 

likely be ineligible for a PPACA premium tax credit because their incomes 

are too low, and their eligibility for Medicaid will depend in part on their 

state’s decision on Medicaid expansion (see table 4).

 

49HHS has proposed a de minimis variation of +/-2 percentage points for the actuarial 

value associated with each metal tier (e.g., silver plans will be able to have actuarial 

values that range from 68 to 72 percent). See 77 Fed. Reg. 70644, 70671 (to be codified 

at 45 C.F.R. § 156.140). CCIIO officials told us, that in 2014, plans with actuarial values 

that do not fall within +/- 2 percentage points of one of the metal tiers will not be allowed to 

be sold either inside or outside of the PPACA exchanges.

When the HCTC 

Expires Most HCTC 

Participants Will 

Likely Be Ineligible 

for a PPACA Premium 

Tax Credit or Eligible 

for a Credit Less 

Generous Than the 

HCTC
 

Page 18 GAO-13-147 HCTC and PPACA Premium Tax Credits

Table 4: Percentage of HCTC Participants Who Will Likely Be Eligible and Ineligible for a PPACA Premium Tax Credit, and 

Possibly Eligible for Medicaid in 2014

HCTC participants Number

Percentage (among all 

HCTC participants)

Eligible for PPACA premium tax credit (household income >138% FPL to 400% FPL) 21,748 55% 

Credit more generous than HCTC 9,054 23 a

Credit less generous than HCTC 12,694 32 a

Either eligible for PPACA premium tax credit more generous than HCTCb

1,678

or eligible for 

Medicaid (household income 100% FPL to 138% FPL) 4 a

Ineligible for PPACA premium tax credit but possibly eligible for Medicaid 

(household income <100% FPL) 1,312 3 

Ineligible for PPACA premium tax credit (household income >400% FPL) 14,726 37

Total number of participants 39,464 100% c

Source: GAO analysis of IRS data.

Notes: The percentages may not add to 100 percent because of rounding.

a

To compare the PPACA premium tax credit amounts to the HCTC amounts, we calculated PPACA 

premium tax credits using the same premium amount each HCTC participant was estimated to have 

paid for his or her HCTC coverage.

b

For participants who will likely be eligible for a PPACA premium tax credit because their state did not 

expand Medicaid, the tax credit will likely be more generous than the HCTC.

c

We excluded all participants who were age 65 or older in 2010, and those for whom we were unable 

to obtain tax data. As a result, 39,464 of the 43,864 participants in 2010 were included in our 

analyses.

For the HCTC participants who will likely be eligible for a PPACA 

premium tax credit in 2014, projections from our analysis of 2010 IRS 

data show that there will be variation in the extent to which their credit 

differs from the HCTC. For example, of the total 39,464 HCTC 

participants in our analysis, 6,492 will likely receive a PPACA premium 

tax credit at least 25 percent less than the HCTC. However, up to 12,141 

participants will likely receive a credit similar to or greater than the HCTC. 

For example, 2,922 participants will likely receive a PPACA premium tax 

credit of about the same value as the HCTC (within 5 percentage points 

above or below the HCTC). In addition, depending in part on whether or 

not their state expands Medicaid, between 1,823 and 3,217 participants 

will likely receive a credit more than 25 percent higher than the HCTC 

(see fig. 1).
 

Page 19 GAO-13-147 HCTC and PPACA Premium Tax Credits

Figure 1: Comparison of the PPACA Premium Tax Credit to the HCTC among HCTC 

Participants Who Will Likely Be Eligible for a PPACA Premium Tax Credit in 2014

Note: To compare the PPACA premium tax credit amounts to the HCTC amounts, we calculated 

PPACA premium tax credits using the same premium amount each HCTC participant was estimated 

to have paid for his or her HCTC coverage.

The PPACA premium tax credit was designed to provide a larger subsidy 

amount to lower-income tax filers than to higher-income tax filers. Thus, 

lower-income HCTC participants who will likely be eligible for a PPACA 

premium tax credit50

 

50This assumes that HCTC participants with household incomes from 100 percent of the 

FPL to 400 percent of the FPL will likely be eligible for a PPACA premium tax credit.

will pay a smaller share of their incomes for 

premiums under PPACA in 2014 than they did under the HCTC. 
 

Page 20 GAO-13-147 HCTC and PPACA Premium Tax Credits

For example, projections from our analysis of 2010 IRS data show that 

while all 2,488 HCTC participants with incomes from 100 percent51 to 

150 percent of the FPL will likely pay between 2 percent and 4 percent of 

their incomes for health plan premiums under the PPACA rule, 1,456 

HCTC participants—close to 60 percent of participants in the same 

income range—paid 9.5 percent or more of their incomes for health plan 

premiums under the HCTC. In contrast, while all 7,658 HCTC participants 

with incomes from 300 percent to 400 percent of the FPL52 will likely pay 

9.5 percent of their household income for premiums under the PPACA 

rule, 2,391—over 30 percent of participants in the same income range—

paid less than 4 percent of their household income for premiums under 

the HCTC (see fig. 2). Unlike the HCTC that pays 72.5 percent of health 

plan premiums, individuals eligible for a PPACA premium tax credit will 

continue to pay that set percentage even if premiums increase because 

PPACA rules limit the amount individuals will pay for premiums to a set 

percentage of their incomes.53

 

51Household incomes at 100 percent of the FPL in 2010 ranged from $10,830 for an 

individual to $22,050 for a family of four in the 48 contiguous states and the District of 

Columbia.

52Household incomes at 400 percent of the FPL in 2010 ranged from $43,320 for an 

individual to $88,200 for a family of four in the 48 contiguous states and the District of 

Columbia.

53In 2012, the Congressional Budget Office and staff from the Joint Committee on 

Taxation reported that there is uncertainty about the future growth rate of private 

insurance premiums as a result of the insurance coverage provisions in PPACA. See 

Congressional Budget Office, Estimates of the Effects of the Affordable Care Act on the 

Number of People Obtaining Employment-Based Health Insurance (Washington, D.C.: 

March 2012). However, according to Congressional Budget Office projections, premiums 

for private health insurance per enrollee will increase by 5.7 percent per year, on average, 

between 2012 and 2022. See Congressional Budget Office, Updated Estimates for the 

Insurance Coverage Provisions of the Affordable Care Act (Washington, D.C.: March 

2012). Another study from the Commonwealth Fund said that that the provisions in 

PPACA may help slow the rate of premium growth over time with a larger risk pool of 

younger, healthier people. See The Commonwealth Fund, Help on the Horizon: How the 

Recession Has Left Millions of Workers Without Health Insurance, and How Health 

Reform Will Bring Relief (Washington, D.C.: March 2011).
 

Page 21 GAO-13-147 HCTC and PPACA Premium Tax Credits

Figure 2: Comparison of the Percentage of Household Income Spent on Premiums 

with the HCTC to Premiums with a PPACA Premium Tax Credit among HCTC 

Participants Who Will Likely Be Eligible for a PPACA Premium Tax Credit in 2014
 

Page 22 GAO-13-147 HCTC and PPACA Premium Tax Credits

a

The expiration of the HCTC and implementation of PPACA cost-sharing 

subsidies will also affect HCTC participants’ out-of-pocket costs for health 

plans. Projections from our analysis of 2010 IRS data show that up to 

28 percent of all HCTC participants who are eligible for the PPACA 

premium tax credit will likely also be eligible for a PPACA cost-sharing 

subsidy in 2014 to help pay for deductibles and copays, depending in part 

on whether or not their state expands Medicaid. Similar cost-sharing 

subsidies are not available for the HCTC, therefore, this would be an 

additional financial benefit for those who qualify.

This analysis assumes that the second-lowest-cost silver plan was chosen. The percentage of 

household income for premiums with a PPACA premium tax credit may vary if a more or less 

generous plan is purchased through the exchanges.

The effect of the expiration of the HCTC and implementation of certain 

PPACA provisions will likely be different for nonparticipants54—individuals 

who were potentially eligible for the HCTC in 2010 but did not participate 

in it—than it will be for participants. First, nonparticipants who may not be 

eligible for PPACA premium tax credits or who may be eligible for tax 

credits less generous than the HCTC will not be losing any benefits 

because they are not receiving the HCTC. Our projections show that 

70 percent of nonparticipants fall into this category. Second, because 

some individuals do not participate in the HCTC since they cannot afford

to do so, some nonparticipants who will be eligible for PPACA premium 

tax credits that are more generous than the HCTC or who are eligible for 

Medicaid coverage under PPACA may choose to use these options and 

receive benefits they do not receive under the HCTC. Our projections 

show that up to 30 percent of nonparticipants fall into this category, 

depending in part on whether or not their state expands Medicaid and 

whether they meet all other eligibility criteria for the PPACA premium tax 

credits.55

 

54We excluded all nonparticipants who were age 65 or older in 2010, and those for whom 

we were unable to obtain tax data. As a result, 390,203 of the 469,168 HCTC 

nonparticipants in 2010 were included in our analyses.

55For example, individuals who have access to employer-sponsored health plans may not 

be eligible for the PPACA premium tax credits.
 

Page 23 GAO-13-147 HCTC and PPACA Premium Tax Credits

In addition to being eligible for the PPACA premium tax credit, based on 

projections from our analysis of 2010 IRS data, up to 30 percent of all 

HCTC nonparticipants may also be eligible for a PPACA cost-sharing 

subsidy in 2014 to help pay for deductibles and copays, depending in part 

on whether or not their state expands Medicaid and whether they meet all 

other eligibility criteria for the PPACA premium tax credits.

See appendix I for details on characteristics of 2010 HCTC participants 

and nonparticipants.

The health plan coverage available under PPACA will be comparable to 

coverage in current HCTC-qualified health plans. Specifically, the 

categories of services that plans purchased through the PPACA 

exchanges will be required to cover are comparable to those currently 

covered by most HCTC plans, and the actuarial values of HCTC plans 

are likely above the minimum level of coverage that will be required in 

PPACA exchange plans. However, under PPACA, HCTC participants 

may have an incentive to choose plans through the exchanges that have 

different levels of coverage than their HCTC plans.

The EHB categories that will be required for plans purchased through the 

PPACA exchanges are comparable to the categories of services covered 

in almost all of the health plans used now by HCTC participants. 

Specifically, the categories covered by COBRA plans as well as the four 

HCTC state-qualified plans and the VEBA plan that we reviewed are 

comparable to the EHB categories. Collectively, at least 93 percent of 

HCTC participants in 2011 were enrolled in these three types of HCTC 

plans. However, for two of the EHB categories—”rehabilitative and 

habilitative services and devices” and “pediatric services, including oral 

and vision care”—more services may be covered by the plans purchased 

through the PPACA exchanges than are covered by the COBRA, HCTC 

state-qualified, and VEBA plans. This is because many health plans, 

whether HCTC or other, do not currently cover habilitative services or 

pediatric dental and vision services. While not all of the EHB categories 

are covered by individual market plans, only about 1 percent of HCTC 

participants are covered by individual market plans.

Health Plan Coverage 

under PPACA Will Be 

Comparable to HCTC 

Plans, but 

Participants May 

Have an Incentive to 

Change Their Level of 

Coverage 

The Categories of Services 

That Will Be Required for 

Plans Purchased through 

the PPACA Exchanges Are 

Comparable to the 

Categories of Services 

Currently Covered by 

HCTC Plans
 

Page 24 GAO-13-147 HCTC and PPACA Premium Tax Credits

COBRA plans (46 percent of HCTC participants). COBRA plans are an 

extension of employer-sponsored health plans, and our analysis of data 

reported in a 2011 Department of Labor report found that employersponsored health plans generally covered services in the EHB 

categories.56 For example, in the EHB category of ambulatory care, 

100 percent of employer-sponsored health plans cover physician office 

visits; 98 percent of plans cover outpatient surgery; and 73 percent of 

plans cover home health care services. In addition, the report indicated 

that the majority of employer-sponsored health plans cover services in the 

EHB categories of hospitalization, emergency services, maternity care, 

mental health and substance abuse disorders, and prescription drugs. 

Although COBRA plans generally cover services in the EHB categories, it 

is possible that coverage of habilitative services and pediatric dental and 

vision services will be more generous in plans purchased through the 

PPACA exchanges than in COBRA plans. According to CCIIO, the EHB 

categories that are commonly not covered among typical employer plans 

are habilitative services, pediatric oral services, and pediatric vision 

services.57

HCTC state-qualified plans (37 percent of HCTC participants). Our 

analysis of four 2012 HCTC state-qualified plans found that they also 

generally covered services in all of the EHB categories. Specifically, all of 

the plans we reviewed—including both the four potential exchange 

benchmark plans and the four HCTC state-qualified plans—covered 

services in the same EHB categories, such as ambulatory care, 

preventive care, laboratory services, hospitalization, and emergency 

services. In addition, all of the plans covered prescription drugs to some 

extent; although one of the HCTC state-qualified plans that we reviewed 

covered generic prescriptions but did not cover brand-name prescriptions. 

Among some of the HCTC state-qualified plans and the potential 

benchmark plans there was an absence of coverage for subsets of 

 

56Department of Labor, Selected Medical Benefits. The report used data that the 

Department of Labor obtained from 2009 health plan documents as well as published 

survey data from the 2008 and 2009 Bureau of Labor Statistics National Compensation 

Survey (NCS), which were the most recently available NCS service-level data for health 

plans sponsored by private sector employers.

57See 77 Fed. Reg. 70644, 70649 (preamble to proposed rules, II. C. 2. c.). It is unknown 

whether the specific COBRA plans that HCTC participants are enrolled in cover these 

services, as the data sources that we reviewed on employer-sponsored health plans did 

not address these services.
 

Page 25 GAO-13-147 HCTC and PPACA Premium Tax Credits

services in certain EHB categories, such as habilitative services and 

pediatric dental and vision services, which are services that will be 

required to be covered in plans sold through the PPACA exchanges. For 

example, habilitative services were not covered by two of the potential 

exchange benchmark plans or by three of the HCTC state-qualified 

plans.58

VEBA plans (10 percent of HCTC participants). The potential 

exchange benchmark plans cover the same EHB categories that the 2012 

VEBA plan that we reviewed does. Also, like some of the potential 

exchange benchmark plans, the VEBA plan does not cover certain 

services that are a subset of certain EHB categories, such as habilitative 

services. 

Individual market plans (1 percent of HCTC participants). Plans 

purchased through the PPACA exchanges may provide coverage of EHB 

categories in which coverage may be more limited in individual market 

plans. In 2011, HHS reported that coverage of certain EHB categories is 

limited in individual market plans, specifically for maternity services, 

substance abuse services, mental health services, and prescription 

drugs.59 However, only about 1 percent of HCTC participants are enrolled 

in individual market plans.

The vast majority of HCTC participants in 2012 were likely enrolled in 

plans with actuarial values that were above the minimum level of 

60 percent (bronze) required for plans purchased through the PPACA 

exchanges, including many who were likely enrolled in plans that had 

actuarial values of 80 percent (gold) or higher.

 

58For any EHB category where a potential exchange benchmark plan lacks coverage, the 

plan will be supplemented to ensure that the plan covers services in all 10 EHB 

categories. For example, to ensure that plans cover habilitative services, HHS has 

proposed that plans either offer habilitative services at parity with rehabilitative services or 

determine which habilitative services they will cover and report those to HHS. See 77 Fed. 

Reg. 70644, 70670 (to be codified at 45 C.F.R. 156.115(a)(4).

59Department of Health and Human Services, Office of the Assistant Secretary for 

Planning and Evaluation, Essential Health Benefits. 

HCTC Plans’ Actuarial 

Values Are Likely above 

PPACA’s Minimum Level of 

Value 
 

Page 26 GAO-13-147 HCTC and PPACA Premium Tax Credits

COBRA plans (46 percent of HCTC participants). The majority of 

HCTC participants in COBRA plans are likely to be in plans with actuarial 

values of 80 percent or higher on the basis of data from two studies. One 

study estimated that 80 percent of all enrollees in employer-sponsored 

health plans in 2010 were in plans that met or exceeded 80 percent 

(gold).60 The other study estimated that about 65 percent of all employees 

enrolled in group health plans in 2010 were in plans with actuarial values 

that met or exceeded 80 percent (gold).61

HCTC state-qualified and VEBA plans (47 percent of HCTC 

participants combined). The actuarial values of the four HCTC statequalified plans and the one VEBA plan that we reviewed in the selected 

states vary. However, all of the plans have an actuarial value of at least 

60 percent (bronze) and three of the five plans have an actuarial value of 

80 percent (gold) or higher.62 See table 5.

 

60Department of Health and Human Services, Office of the Assistant Secretary for 

Planning and Evaluation, Actuarial Value and Employer-Sponsored Insurance. 

61Jon R. Gabel et al., “More Than Half of Individual Health Plans Offer Coverage That 

Falls Short Of What Can Be Sold Through Exchanges As of 2014.” 

62Most of the plan officials we interviewed told us that the methods they used to calculate 

the actuarial values of the selected HCTC plans align with the February 2012 CCIIO 

Actuarial Value and Cost-Sharing Reductions Bulletin. However, for one of the selected 

HCTC plans, its actuarial value reflects the costs and utilization of a high-risk population 

and uses data reflective of that population in 2010 rather than of the plan’s 2012 

population.
 

Page 27 GAO-13-147 HCTC and PPACA Premium Tax Credits

Table 5: Actuarial Value of Selected HCTC Plans in Selected States, 2012

Actuarial value level of coverage (percent)

Selected 

HCTC plan

b

Below 60 a 60–69 70-79 80-89 Above 90

Plan 1 X 

Plan 2 X 

Plan 3c X 

Plan 4 X 

Plan 5 X 

Total 0 2 0 1 2

Source: GAO analysis of interviews with health plan officials.

a

The five selected plans include four HCTC state-qualified plans and one VEBA plan. Plan officials 

provided all actuarial values during interviews with GAO. All values reflect the plan coverage available 

in 2012 with the exception of Plan 3’s value.

b

For the purposes of our analysis, we used actuarial value ranges of 10 percentage points for 

each level of coverage. Plan officials told us the actuarial value range that each plan was in (i.e. 70-

79 percent) rather than the specific actuarial value estimate. However, HHS has proposed a de 

minimis variation of +/-2 percentage points (e.g., a silver-level plan will be able to have a value from 

68 to 72 percent) in actuarial value rather than the wider range of actuarial values at each level of 

coverage that our analysis used. CCIIO officials told us that plans that have actuarial values that do 

not fall within +/-2 percentage points of one of the levels of coverage will not be sold inside or outside 

of an exchange.

c

Plan 3’s actuarial value was calculated using estimated 2010 costs and utilization for the plan’s 

standard population rather than estimated costs and utilization for the current (2012) standard 

population of the plan. A plan official told us that it is likely that actuarial value has increased slightly 

since 2010, as the plan’s deductibles have not increased since 2010 to accommodate any increases 

in inflation.

Individual market plans (1 percent of HCTC participants). The small 

number of HCTC participants that have individual market plans are likely 

to have a plan with a lower level of actuarial value. A recent study63 found 

that about half of the plans (51 percent) in the individual market have an 

actuarial value of less than 60 percent and another third (33 percent) 

have an actuarial value at the 60 percent (bronze) level.64

 

63Jon R. Gabel et al., “More Than Half of Individual Health Plans Offer Coverage That 

Falls Short Of What Can Be Sold Through Exchanges As of 2014.” 

64This study used 2010 data on individual market plans from a sample of five states. We 

found that at least a third of the HCTC monthly participants enrolled in individual market 

plans in 2011 were from the five states that were sampled for the study.
 

Page 28 GAO-13-147 HCTC and PPACA Premium Tax Credits

The varied actuarial values of the HCTC plans suggest that the level of 

coverage for many HCTC participants may change after the expiration of 

the HCTC depending on the options available to participants and the 

choices they make in 2014 under PPACA. Also, the way that the PPACA 

tax credits will be calculated may incentivize HCTC participants to change 

their level of coverage.65 The PPACA premium tax credits will be 

calculated from a reference plan at the 70 percent (silver) level of 

coverage, so individuals who choose other plans—with either higher or 

lower levels of actuarial value—could face higher or lower out-of-pocket 

costs for premiums. However, plans with higher levels of actuarial value 

may result in lower out-of-pocket costs for copays and deductibles, and 

plans with lower levels of actuarial value may result in higher out-ofpocket costs for copays and deductibles. Ultimately, for any HCTC 

participant, the overall financial effect of a change from an HCTC plan to 

a PPACA exchange plan will be the net effect of the choice between 

higher or lower premium costs and higher or lower cost-sharing.66

Further, out-of-pocket costs for premiums and cost-sharing for HCTC 

participants will be affected by whether they are eligible for the PPACA 

premium tax credits and cost-sharing subsidies.67

• Some HCTC participants eligible for PPACA premium tax credits 

could have an incentive to change to a higher level of coverage. 

For example, if the HCTC participants who have coverage at the 

Considering these 

factors, current HCTC participants may choose to change their level of 

coverage when the HCTC expires. For example:

 

65A change in the level of coverage, in general, will not affect the services that are 

covered as all plans in a given exchange will cover services on the basis of their 

exchange’s EHB benchmark plan.

66While it is unknown how premium amounts may change in 2014, there will be 

restrictions under PPACA on the extent to which health insurance issuers who offer 

coverage through the exchanges can vary premiums. For example, health insurance 

issuers will still be able to vary premiums to a certain extent on the basis of age, tobacco 

use, family size, and geography, but they will no longer be allowed to vary premiums on 

the basis of factors such as health status, gender, or preexisting conditions.

67In addition, other PPACA provisions requiring changes across the health insurance 

market are already affecting or will soon affect health plans, including many HCTCqualified plans and plans that will be purchased through the PPACA exchanges. For 

example, lifetime limits that plans placed on essential benefits were prohibited in all 

individual market and group plans for plan years starting on or after September 23, 2010, 

and annual limits that plans placed on essential benefits are gradually being phased out 

for most health plans and will be prohibited by 2014. Pub. L. No. 111-148, §§ 1001(5), 

10101(a), 124 Stat. 130, 883.

Certain PPACA Provisions 

May Incentivize HCTC 

Participants to Change 

Their Level of Coverage in 

2014
 

Page 29 GAO-13-147 HCTC and PPACA Premium Tax Credits

60 percent (bronze) level of coverage are eligible for PPACA premium 

tax credits, they may choose a PPACA exchange plan that has a 

higher actuarial value than their current HCTC plan. This is because 

PPACA premium tax credit amounts will be calculated on the basis of 

the reference plan premium (the second-lowest-cost 70 percent 

[silver] plan) for their exchange. Given this, it could be possible for 

these HCTC participants to purchase a 70 percent (silver) plan that 

would have on average lower out-of-pocket cost-sharing expenses 

than their current HCTC plan.

• Alternatively, some HCTC participants who will be eligible for 

PPACA premium tax credits could have an incentive to change to 

a lower level of coverage. For example, if the HCTC participants 

who have coverage at the 80 percent (gold) or 90 percent (platinum) 

levels of coverage are eligible for a PPACA premium tax credit and 

want to purchase a plan through a PPACA exchange with a 

comparable actuarial value, they will have to pay the difference 

between the premium for a plan with an actuarial value of 80 percent 

(gold) or 90 percent (platinum) and their PPACA premium tax credit. 

Again, this is because the PPACA premium tax credit amount will be 

based on the reference plan premium (the second-lowest-cost 

70 percent [silver] plan) for their exchange. For example, if a 

participant in a family of four with a household income at 300 percent 

of the FPL purchases a plan in a PPACA exchange with an annual 

reference (silver) plan premium for a family of four of $10,000, he or 

she would receive a PPACA premium tax credit of $3,716 and would 

have to pay $6,284 for the premium if he or she purchased the 

reference plan. However, if the participant instead decided to 

purchase a plan with an actuarial value of 80 percent (gold) having an 

annual premium of $11,000, the PPACA premium tax credit would 

remain the same ($3,716) but the premium amount the participant 

would have to pay would increase by $1,000 to $7,284. Because 

participants would have to pay this difference in premiums, they may 

opt to purchase a plan with a lower level of actuarial value than their 

current plan, such as a plan at the 70 percent level of coverage 

(silver), even though it may have higher out-of-pocket cost-sharing 

expenses on average than their current plan. In contrast, HCTC 

participants may also have an incentive to choose a plan below the 70 

percent (silver) level if obtaining the lowest possible premium is their 

main factor in choosing a health plan. In this case, participants could 

choose a plan at the 60 percent (bronze) level of coverage because 

the premium cost would likely be lower than choosing a 

70 percent (silver) level plan. However, a plan at this level would 
 

Page 30 GAO-13-147 HCTC and PPACA Premium Tax Credits

mean that on average participants could have higher out-of-pocket 

cost-sharing expenses than they would with a 70 percent (silver) plan.

• The health plan coverage options for HCTC participants not 

eligible for a PPACA premium tax credit will vary depending on 

their household income level. The HCTC participants’ not eligible 

for PPACA premium tax credits because their incomes are above 

400 percent of the FPL could decide to purchase a health plan at any 

level of coverage. However, the loss of the HCTC combined with their 

ineligibility for PPACA premium tax credits because of their higher 

incomes could affect the level of coverage that they choose or even 

whether they purchase a health plan through a PPACA exchange or 

elsewhere. The HCTC participants who have household incomes 

below 138 percent of the FPL and live in states that expand Medicaid 

will not be eligible for PPACA premium tax credits; instead they will be 

eligible for Medicaid. However, in states that do not expand Medicaid, 

it is uncertain what health plan, if any, that HCTC participants who 

have household incomes below 100 percent of the FPL may purchase 

in 2014. These individuals would not be eligible for PPACA premium 

tax credit in any instance or Medicaid in most instances, and their 

ability to pay for premiums will be limited. However, because of their 

low incomes, these HCTC participants will likely be exempt from 

certain PPACA provisions, such as the tax penalty that individuals will 

have to pay beginning in 2014 if they do not have a health plan.68

We provided draft copies of this report to HHS and IRS for review, and 

both provided technical comments, which we incorporated as appropriate.

 

68Participants who are exempt from the tax penalty will have the option to purchase 

individual market catastrophic health plans through the PPACA exchanges that will have 

an actuarial value below 60 percent because these plans will be available to individuals 

who are exempt from the tax penalty (and available to individuals under the age of 30). 

However, even though these participants will have the option to purchase this coverage, it 

is unlikely that they will because the cost of their premium will be high relative to their 

income and the lower actuarial value of the plans will increase the potential costs of 

accessing covered services.

Agency Comments
 

Page 31 GAO-13-147 HCTC and PPACA Premium Tax Credits

As arranged with your offices, unless you publicly announce the contents 

of this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Secretary of the 

Treasury and the Commissioner of the IRS, the Secretary of Health and 

Human Services, appropriate congressional committees, and other 

interested parties. In addition, the report will be available at no charge on 

the GAO website at http://www.gao.gov. 

If you or your staffs have any questions about this report, please contact 

me at (202) 512-7114 or dickenj@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs are on the last page of this 

report. GAO staff who made major contributions to this report are listed in 

appendix II.

John E. Dicken

Director, Health Care
Appendix I: Characteristics of Health Coverage 

Tax Credit (HCTC) Participants and 

Nonparticipants in 2010

Page 32 GAO-13-147 HCTC and PPACA Premium Tax Credits

We identified HCTC participants and nonparticipants by age groups, 

household income based on a percentage of the federal poverty level 

(FPL), and HCTC eligibility type using 2010 Internal Revenue Service 

(IRS) data. We found that most HCTC participants and nonparticipants 

were ages 55 to 64 (see table 6), over a third of participants and 

nonparticipants had household income greater than 400 percent of the 

FPL (see table 7), and more than half were potentially eligible for the 

HCTC because of participation in the Trade Adjustment Assistance (TAA) 

or Reemployment Trade Adjustment Assistance (RTAA) programs rather 

than being eligible by having their pension payments assumed by the 

Pension Benefit Guaranty Corporation (PBGC) (see table 8).

Table 6: Number and Percentage of HCTC Participants and Nonparticipants by Age 

Groups in 2010

Participantsa Nonparticipants

Age groups

a

Number Percent Number Percent

34 or younger 1,127 3% 31,577 8%

35–44 3,505 9 48,462 13

45–54 8,370 22 70,316 19

55–64 24,733 66 223,878 60

Source: GAO analysis of IRS data.

a

This analysis excludes all participants and nonparticipants who were age 65 or older in 2010, any tax 

filers for whom we could not identify an age, and those for whom we were unable to obtain tax data. 

As a result, 86 percent of participants and 80 percent of nonparticipants were included in this 

analysis. 

Appendix I: Characteristics of Health 

Coverage Tax Credit (HCTC) Participants 

and Nonparticipants in 2010
Appendix I: Characteristics of Health Coverage 

Tax Credit (HCTC) Participants and 

Nonparticipants in 2010

Page 33 GAO-13-147 HCTC and PPACA Premium Tax Credits

Table 7: Number and Percentage of HCTC Participants and Nonparticipants by 

Household Income Based on the FPL in 2010

Participantsa Nonparticipants

Household income 

by percent of FPL

a

Number Percent Number Percent

<100% 1,312 3% 25,935 7%

100 to <150 2,488 6 38,003 10

150 to <200 4,205 11 42,512 11

200 to <250 4,424 11 38,457 10

250 to <300 4,651 12 36,972 10

300 to 400 7,658 19 65,022 17

>400 14,726 37 143,302 37

Source: GAO analysis of IRS data.

Notes: The percentages may not add to 100 percent because of rounding.

a

This analysis excludes all participants and nonparticipants who were age 65 or older in 2010, and 

those for whom we were unable to obtain tax data. As a result, 90 percent of participants and 83 

percent of nonparticipants were included in this analysis. 

Table 8: Number and Percentage of HCTC Participants and Nonparticipants by 

Eligibility Type in 2010

Participantsa Nonparticipants

Eligibility Type

a

Number Percent Number Percent

TAA or RTAA 22,148 59 214,843 55

PBGC 14,443 38 170,458 44

Multiple Eligibility 1,136 b 3 4,898 1 

Source: GAO analysis of IRS data.

a

This analysis excludes all participants and nonparticipants who were age 65 or older in 2010, any tax 

filers for whom we could not identify an eligibility type, and those for whom we were unable to obtain 

tax data. As a result, 86 percent of participants and 83 percent of nonparticipants were included in 

this analysis. 

b

According to IRS officials, HCTC participants and nonparticipants may have multiple eligibility types, 

for example, individuals may be eligible through TAA benefits and by having their pension payments 

assumed by PBGC.
Appendix II: GAO Contact and Staff 

Acknowledgments

Page 34 GAO-13-147 HCTC and PPACA Premium Tax Credits

John E. Dicken, (202) 512-7114 or dickenj@gao.gov

In addition to the contact named above, Gerardine Brennan, Assistant 

Director; George Bogart; Andrew Ching; Sandra George; Alison Goetsch; 

Lisa A. Lusk; John Mingus; and Laurie Pachter made key contributions to 

this report.

Appendix II: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 
Related GAO Products

Page 35 GAO-13-147 HCTC and PPACA Premium Tax Credits

Trade Adjustment Assistance: Changes to the Workers Program 

Benefited Participants, but Little Is Known about Outcomes. GAO-12-953. 

Washington, D.C.: September 28, 2012.

Medicaid Expansion: States’ Implementation of the Patient Protection and 

Affordable Care Act. GAO-12-821. Washington, D.C.: August 1, 2012.

Health Coverage Tax Credit: Participation and Administrative Costs. 

GAO-10-521R. Washington, D.C.: April 30, 2010.

Health Coverage Tax Credit: Simplified and More Timely Enrollment 

Process Could Increase Participation. GAO-04-1029. Washington, D.C.: 

September 30, 2004.

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