ADVISORY	:	UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 02-03
TO	:	ALL STATE WORKFORCE AGENCIES
FROM	:	CHERYL ATKINSON Administrator Office of Workforce Security
SUBJECT	:	Health Insurance Tax Credit for Eligible Trade Adjustment Assistance/Trade Readjustment Allowances (TAA/TRA) Recipients

1. Purpose. To provide state workforce agencies with information about new responsibilities related to an income tax credit for health insurance premiums available to eligible TAA/TRA recipients for 2002.

2. References. The Trade Act of 1974, as amended (P.L. 93-618, as amended); the Trade Act of 2002 (P.L. 107-210); 20 CFR 617; 29 CFR 90; General Administration Letter 7-94 with Changes 1, 2, and 3. The amendments to the TAA program may also be referred to as the Trade Adjustment Assistance Reform Act of 2002.

3. Background. The Trade Act of 2002 (the Act) extended and amended the TAA program and authorized a federal income tax credit for health insurance premiums paid by eligible TAA recipients. Operating Instructions are being developed for the substantive amendments to the TAA program as well as the health insurance tax credit. Both will be issued in the near future. However, because the health insurance tax credit will be available on tax year 2002 Form 1040 returns, state agencies will be required to provide information to the Internal Revenue Service (IRS) by November 22, 2002. In addition, states will be required to issue an IRS form for tax year 2002 to individuals who received TRA (or would have been eligible to receive TRA had their UI been exhausted) during December 2002.

4. Action Required. This advisory alerts the state workforce agencies to begin programming efforts to compile a listing of individuals (specified below) which the IRS will use to issue information packets about the health insurance tax credit along with a form and instructions for claiming the credit on 2002 returns. States should begin programming IRS Form 8887 (attached) into their benefits systems to comply with requirements of the health insurance tax credit. IRS Form 8887 will be used as documentation of TAA/TRA eligibility by individuals who claim the tax credit.
   
   

   • Listing of Individuals for IRS Purposes
     
     States should identify individuals currently receiving TRA benefits and likely to continue receiving TRA during December 2002. Also, to the extent possible, states should identify UI claimants who are eligible for TRA, except that they have not yet exhausted their UI. Although the state may not know whether these individuals will meet all future eligibility requirements, the state should know that these claimants are covered under a TAA petition that has been certified. The listings should include the name, address, and social security number of each individual (see attached record layout) and must be in a specified electronic media format (attached). States should submit these listings to the IRS with a transmittal letter on state agency letterhead signed by an appropriate agency official. The letter should state that the enclosed list is submitted for purposes of implementing the health insurance tax credit provisions of the Trade Act of 2002, and certify that the individuals named in the listing are receiving TRA benefits during November and could continue to be eligible to receive TRA during December 2002, or are receiving UI during November and could be eligible for TRA except that they have not yet exhausted their UI (i.e., they are covered under a petition). Please include the name, title and phone number of a person that the IRS can contact if there are questions. Mail this information to the IRS at the following address:
     

     Internal Revenue Service
     W:CAR:MP:M:T:M
     Attention: Glenn Pelishek
     Room 6230
     1111 Constitution Ave., N.W.
     Washington, D.C. 20224
     

   • IRS Form 8887
     
     States should program Form 8887 into their benefits system and prepare to issue this IRS form with the pertinent information completed. The form must be issued to each individual who receives a TRA payment during the month of December 2002, or would have been eligible to receive a TRA payment, except that they had not exhausted their UI. The instructions on IRS Form 8887 indicate that this form is to be furnished to the individual no later than February 18, 2003. (The state does not need to send the IRS a copy of the Form 8887.) An electronic “PDF” format version of Form 8887 can be found on the USDOL Web site at the Internet address below:
     https://oui.doleta.gov/dmstree/uipl/uipl2k3/form8887.pdf.

5. Administrative Costs. Funding from National Emergency Grants (NEG) will be available to cover administrative costs for activities described in this advisory and other activities related to this health insurance tax credit. States will need to submit requests for funding according to special application procedures for NEG funds, which will be issued in the near future. States may request funding for pre-award costs for activities described above that were undertaken subsequent to the passage of the Act.

6. Inquiries. Please direct all inquiries to the appropriate regional office.

7. Attachment.
   Attachment A - Record Layout for the Health Insurance Tax Credit Mailout
   Attachment B - Mail Information Media Format
   Attachment C - IRS Form 8887 and Instructions.