Qualified Vs Non-Qualified Policies
Qualified health insurance policies are those plans that meet the IRS requirements. All contributions made by an employer to qualified health insurance are tax-deductible. Similarly, a non-qualified policy will not bring you any tax relief.
HCTC stands for Health Coverage Tax Credit and that is what you will claim for when you have a qualified health insurance policy. The HCTC pays 65% of the health insurance premiums of people who qualify for it and in that way makes it possible for individuals and their families to afford health insurance.
You will not automatically receive the tax credit if you are part of a qualified health plan though. There are certain eligibility requirements.
Below are the types of health insurance that qualifies for the HCTC:
1. COBRA is legislation that stipulates that your former employer must continue to offer job-based health cover if you lose your job or your health insurance by other (qualified) means. This legislation enables you to enroll for COBRA after you have left a job but you must do so within 60 days after you have left.
2. A state-qualified health plan “should be bought directly from an insurance company” or from an organization appointed by your state and is “not available through an employer”.
3. Spousal coverage refers to group health cover that is on offer through your spouse`s employer, either the current employer or a former one. Make sure you comply with this: “if you and your spouse pay more than 50% of the cost of the spousal coverage, you can receive the HCTC. If you and your spouse pay 50% or less of the cost of the spousal coverage, you cannot receive the HCTC”.
4. Non-group/individual health plans are sold by private health insurers, a broker/agent to an individual or family.
5. A VEBA (Voluntary Employees` Beneficiary Association) “may be established through a bankruptcy court” although not all VEBAs qualify for the HCTC.
The HCTC pays for particular supplemental insurance coverage types, for example:
prescription-only plans, substance abuse coverage and hearing coverage, as well as comprehensive, major medical insurance coverage.
What the HCTC does not pay for includes: a separate vision or dental plan that does not form part of your comprehensive medical cover and portions of your premium that are dedicated to separately selected options e.g. dental, vision and long-term care cover.
Non-qualified health insurance includes, for instance, the Children`s Health Insurance Program (CHIP), Federal Employees Health Benefits Program (FEHBP), TRICARE supplemental insurance, coverage under a flexible spending account or health reimbursement account, contributions to a health savings account and similar supplemental insurance to an employer-sponsored group health plan.
Furthermore, non-qualified insurance also refers to any insurance if most of the cover is for “on-site medical clinics, liability insurance or a supplement thereto, accident or disability income insurance (or a combination of the two), workers` compensation or similar insurance, credit-only insurance, hospital indemnity or other fixed indemnity insurance (insurance that pays you directly versus paying you to pay the provider of the health service) and automobile medical payment insurance”.
You can use a credit card such as a Virgin credit card to pay for any expenses not covered by your health insurance.