Retirees’ Health Coverage Tax Credit (HCTC)

ACTION ALERT

November 10, 2010

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Dear GM Retiree,

Your support is urgently needed to gain passage of the Tax Extenders Bill which could go to the Senate for a vote as early as next week.

Passage of this Bill is of particular importance to our Delphi colleagues, as well as other retirees, as it offsets 80% of their healthcare insurance premium. Unless Congress acts to extend the program, the provisions of this Bill will expire Dec. 31, 2010.

Your response is time-critical!Unless Congress acts quickly, Delphi and other retirees with VEBAs will not know if they will qualify for the HCTC until it is too late to modify their annual insurance selections.

Additional details and instructions on accessing the NRLN capwiz system follow in the recent notice from Bill Kadereit, President, National Retiree Legislative Network.

We encourage you to make your voice heard!

Extend Retirees' Health Coverage Tax Credit (HCTC)

One of the provisions of the American Recovery and Reinvestment Act allowed retirees whose companies had terminated their pension plan and reduced or eliminated their health care benefits during bankruptcy, to form Voluntary Employee Benefit Associations (VEBA) following the approval of the bankruptcy court judge. The VEBA could then offer health care plans eligible for the Health Coverage Tax Credit (HCTC)-- a federal tax credit first created at 65% in 2003 to help offset the cost of monthly health care insurance premiums for retirees 55 to 64.

Last year, Congress increased the HCTC tax credit for eligible participants from 65% to 80%. Once an individual qualifies for the HCTC, the credit is automatically paid every month by the IRS to the health insurance plan. Qualified individuals pay the remaining 20% cost of the health insurance. This is a big financial assistance to eligible retirees struggling to cope with, in most cases, a significant financial loss of pension income suffered after the Pension Benefit Guaranty Corporation took over their pension plan and the reality of the high cost of monthly health insurance premiums.

Both the Delta Air Lines pilot retirees and the Delphi salaried retirees took advantage of these provisions to form VEBAs that offered HCTC eligible insurance programs to their members who had lost their company-sponsored health care benefits. Unfortunately, these provisions are set to expire on Dec. 31, 2010 unless Congress acts to extend the program.

This problem is compounded by the fact that retirees are now in the annual enrollment period for health care benefits. Unless Congress acts very quickly, Delta and Delphi and other retirees with VEBAs will not know if they will qualify for the HCTC until it is too late to modify their annual insurance selections. HCTC eligible plans must follow very specific guidelines that do not apply to other health care plans and tend to be more expensive than other plans, absent the tax credit offered by the HCTC program.

I am asking you to go to bat for all pre-Medicare-eligible retirees who are in the similar predicament to Delta and Delphi retirees. Please use the NRLN's sample letter to ask your members of Congress to extend the HCTC. Go to http://capwiz.com/abtr/home/ to access the NRLN Action Alert.

Look for the Action Alert headline: EXTEND RETIREES' HEALTH COVERAGE TAX CREDIT (HCTC). Click on the "Take Action" button. On the next screen, type in your zip code and click "GO" to identify your elected representatives and access the sample letter. Personalize the letter with your own comments. If you have a problem accessing the Action Alert with the above link, go to www.nrln.org and click on the "Take Action Now" headline at the top of the NRLN website's home page. Send your email today.

It would also help to call the Washington, DC or state/district office of your Representative and Senators. Use the information in the sample letter to urge support for extending HCTC for retirees enrolled through Bankruptcy court approved VEBAs. A copy of the letter that you send to your lawmakers will be automatically emailed to you. Phone numbers can be found through the NRLN’s Capwiz website at http://capwiz.com/abtr/dbq/officials/ . The more constituents who write and call their Representative and Senators, the better chance there is in gaining their attention on this important issue to retirees who have suffered through a corporate bankruptcy.