MEMO

To:    Consumer Health Assistance Programs in Arizona, Florida, Illinois, Indiana, Michigan, Minnesota,
         Ohio, Pennsylvania, and West Virginia
From: Sonya Schwartz, Health Assistance Partnership
Re:    Health Care Coverage for National Steel Retirees Under Age 65
Date: Revised September 10, 2003 (See Section (I)(B) for the most critical revisions)

_____________________________________________________

As you may already be aware, many retirees of National Steel Corporation lost their retiree health insurance benefits as of August 1, 2003. National Steel had filed for bankruptcy in March 2002, and on May 20, 2003 most of its assets were acquired by United States Steel Corporation.^[1] Thousands of retirees in Arizona, Florida, Illinois, Indiana, Minnesota, Michigan, Ohio, Pennsylvania, and West Virginia have been affected.

As individuals make decisions about their health care coverage, it is important to keep in mind a new program that may be available to help pay for health insurance premiums for certain retirees of National Steel and their spouses and children. The Trade Adjustment Assistance Reform Act of 2002 (TAARA), signed into law on August 8, 2002, offers a tax credit that pays 65 percent of the premiums of certain types of health insurance for certain workers and retirees whose employer-sponsored health coverage is lost because of increased imports or trade-related relocation. This new tax program is called the Health Care Tax Credit (HCTC). 

Beginning August 1, 2003, the HCTC may be claimed in the form of advance payments for health insurance premiums. The retiree pays 35 percent of the premium to the HCTC (Department of Treasury) and HCTC pays the entire premium to the health plan administrator. Individuals must register with the HCTC Customer Contact Center toll free at 1-866-628-HCTC (1-866-628-4282).^[2] The HCTC is also available on a refundable basis in which individuals must pay the entire cost of their health insurance premiums up front, and the tax credit can be claimed in a lump sum by filing IRS form 8885 when they file their tax returns.

The following memo outlines: 1) the types of health insurance coverage available to National Steel retirees, 2) who is eligible for HCTC, and 3) where to go for more information.

I. What Type of Health Insurance Coverage is Available?

A. COBRA -- This option is being referred to by National Steel as "COBRA A" and is currently available and will last until October 31, 2003 for salaried (non-union) employees and until December 31, 2003 for hourly (union) employees. The worker or retiree will have 60 days from when they receive the COBRA election notice to elect COBRA. COBRA will be retroactive to August 1, 2003.  Although COBRA is expensive, if the retiree is eligible for the HCTC, it will subsidize the cost of COBRA.

B. "COBRA B" -- The bankruptcy court ruled that the COBRA B plan offered by NEBCO is COBRA for all purposes.  According to Steve Finan at the U.S. Department of Health and Human Services, the COBRA B plan offered by NEBCO was established in settlement of a COBRA obligation. Therefore the HCTC program will recognize COBRA B as a COBRA plan for purposes of receiving claims for the Health Care Tax Credit. 

NOTE: To check about the COBRA options available to National Steel retirees and displaced workers in your state, contact your state insurance department.

C. Spouse's Plan -- This option is available if the worker or retiree's spouse's employer offers health insurance coverage to the worker. Because the spouse is losing his health insurance coverage, he has rights to enroll with his spouse’s group health insurance coverage, even if the employer is not going through an open enrollment period. However, these enrollment rights generally expire 30 days from the date he loses coverage or August 31, 2003 for National Steel retirees. If the employer contributes less than 50 percent of the monthly premiums, and the individual is eligible, HCTC will subsidize the cost of the spouse's plan. Note: At this time, individuals can only claim HCTC for a spouse's plan when they file their federal tax return and not in advance, the only exception is if the spouse's health insurance is COBRA.

D. A Plan Designated by a State for HCTC -- Many states have already designated plans for individuals eligible for HCTC. The plans are listed below. Under TAARA, these plans must provide the following consumer protections: 1) guaranteed issue, 2) no exclusions for pre-existing conditions; 3) nondiscrimination in premiums, 4) nondiscrimination in benefits.^[3] These consumer protections must be extended to individuals who have three months of prior creditable coverage without a 63 day break in coverage at the time they seek to enroll in the state-based coverage to which the HCTC applies.^[4] Creditable coverage includes group health insurance coverage and most other kinds of health coverage.^[5] Gaps in coverage shorter than 63 days do not count in determining whether an individual has at least three months of prior creditable coverage.

Below, in alphabetical order, is information as of August 4, 2003 about certified plans in states where we know National Steel retirees live. Updated information is available on the IRS HCTC Web site at http://www.irs.gov/individuals/article/0,,id=110016,00.html.

E. Individual Insurance -- Retirees may be able to purchase individual insurance. However, unless they elect and exhaust COBRA (in this case, "COBRA A" only), they will have no right to guaranteed issue of an individual policy in most states.  The HCTC will assist with premiums only if the worker or retiree was covered under individual health insurance during the entire 30 day period before the date that the individual being separated from the employment which qualified him for the HCTC.   In this rare case, the worker or retiree would have had to have been covered by individual health insurance from July 2, 2003 to August 1, 2003.

F. Medicaid and SCHIP -- Low-income retirees and their children may be eligible for Medicaid or SCHIP.  To find out more information, they can contact their local health department, local Department of Social Services, local hospital, or public school.  SHIP programs may also provide guidance.

G. High-Risk Pool -- Some states have high risk pools that provide coverage to individuals who could not purchase insurance elsewhere or who have chronic conditions.  The premiums may be higher than it would cost for one of the above options.  In states where the high risk pool is the HCTC designated plan, the HCTC can help with the premium costs.  However, in most states, the high risk pool is not the designated plan, and the individual will have to pay the full premium.

II. Are the retiree and his spouse and dependents eligible for the tax credit?

National Steel workers and retirees -- and their spouses and dependents-- are eligible for the TAARA tax credit if: 1) are Pension Benefit Guaranty Corporation (PBGC) retirees between 55 and 65; or are 2) receiving trade adjustment assistance.

A. Is the retiree receiving a pension from the PBGC?

National Steel retirees who receive any portion of their pension benefits from the PBGC and who are age 55 or older are eligible for the tax credit.  They can use the credit to purchase coverage until they become eligible for Medicare, or "other specified coverage."^[7] It is important to remember that once the PBGC recipient becomes eligible for Medicare or "other specified coverage," neither the spouse and nor the dependents are eligible for the tax credit.^[8] On May 31, 2003, PBGC assumed responsibility for the defined benefit pension plans formerly sponsored by the bankrupt National Steel Corporation.  PBGC set the Date of Plan Termination (the date the pension plans ended) as December 6, 2002.  PBGC set the Date of Trusteeship (the date that PBGC takes over the management of the pension plan) as May 31, 2003. 
The following pension plans formerly sponsored by National Steel Corporation are currently guaranteed by PBGC: 

• Granite City Pension Plan for Chemical Workers -- 19761000
• Pension Plan for Salaried Employees of National Steel Pellet Company -- 19761300
• Weirton Retirement Program -- 19761400
• National Steel Corporation Retirement Program -- 19836900
• National Steel Corporation Pension Plan - Hourly Employees -- 19837000
• Granite City United Steelworkers of America Pension Plan -- 19837100
• National Steel Pellet Company Pension Plan for Hourly Wage Employees -- 19837400

PBGC mailed a letter to all participants on May 30, 2003 notifying them that it had become trustee of their pension plan. The letter also included some basic information about HCTC. A copy of the letter may be viewed on the PBGC Web site at: http://www.pbgc.gov/plans/national/welcome_letter1.pdf.^[9]

B. Is the Worker Receiving Trade Adjustment Assistance?

Two groups of people receiving trade adjustment assistance are eligible for the HCTC: 1) individuals who receive a Trade Readjustment Allowance (TRA); and 2) individuals who receive Alternative Trade Adjustment Assistance (ATAA).

On July 9th, the Department of Labor certified that the following workers of Nation Steel who became totally or partially separated from employment on or after April 8, 2002 are eligible to apply for adjustment assistance under Section 223 of the Trade Act of 1974:  Eligibility for the adjustment allowance and the HCTC will last two years from the date of certification (April 8, 2004).^[1]

• National Steel Corporation (NSC), Corporate Headquarters, Mishakawa, Indiana (TA-W-51, 611)
• National Steel Corporation, Granite City Division, Granite City, Indiana (TA-W-51, 611A)
• National Steel Corporation, Great Lakes Operations, Ecorse, Michigan (TA-W-51, 611B)
• National Steel Corporation, Midwest Operations, Portage, Indiana (TA-W-51, 611C)
• ProCoil Corporation, Canton, Michigan (TA-W-51, 611D)
• National Steel Corporation, Technical Research Center, Trenton, Michigan (TA-W-51, 611E);
• National Steel Pellet Company, Keewatin, Minnesota (TA-2-51, 611F)
• NSL Incorporated, Portage, Indiana (TA-W-51, 611G)
• TMH, Portage, Indiana (TA-W-51-611H)
• Delray Connecting Railroad, Detroit, Michigan (TA-W-51, 611I)

1. Individuals who receive a Trade Readjustment Allowance (TRA) are eligible for the HCTC. This group includes people who are eligible for a TRA but have not used up their unemployment insurance (UI) benefits.   The TAA program is a benefit for workers who lose their jobs or whose hours of work and wages are reduced as a result of increased imports. Employers, a group of workers, or unions must apply to the Department of Labor to have their employees certified as TAA eligible, and National Steel has already received this certification (see below). TAA includes a variety of benefits and re-employment services to help unemployed workers prepare for and obtain suitable employment. Workers may receive assistance in skill assessment, job search workshops, job development/referral and job placement. In addition, workers may be eligible for training, job search allowance, relocation allowance and other reemployment services. Weekly Trade Readjustment Allowance (TRA) may be payable to eligible workers following their exhaustion of unemployment benefits. Usually, TRA benefits will be paid only if an individual is
   enrolled in a TAA approved training program.
   
   
2. Individuals who receive Alternative Trade Adjustment assistance are eligible for the HCTC.  The ATAA is a benefit for workers at least 50 years of age who have obtained different, full-time employment within 26 weeks of separation from adversely-affected employment. These workers may receive 50 percent of the wage differential (up to a maximum of $10,000) during their two-year eligibility period. To be eligible for the ATAA program, workers may not earn more than $50,000 per year in the new employment. Also, the firm where the workers worked must meet certain eligibility criteria. Workers who take advantage of the ATAA cannot receive three of the regular TAA benefits and services (training, TRA, and job search allowances); they are, however, eligible to apply for relocation allowances and the HCTC. Note: If an individual registers for the tax credit under TAA and then becomes a participant in ATAA, he must re-register and re-qualify for the HCTC at that time.

The spouse and dependents of these TRA and ATAA recipients are also eligible for the tax credit.   Again, it is important to remember that once the TAA recipient becomes eligible for Medicare or "other specified coverage," the spouse and dependents are no longer eligible for the tax credit.^[11]

III. Where to go for more information

A. Senior Health Insurance Counseling Programs -- Call toll free by state:

• Arizona -- (800) 432-4040
• Florida -- (800) 963-5337
• Illinois -- (800) 548-9034
• Indiana -- (800) 452-4800
• Michigan -- (800) 
• Minnesota -- (800) 333-2433
• Ohio -- (800) 803-7174
• Pennsylvania -- (800) 783-7067
• West Virginia -- (877) 987-4463

B. The HCTC Customer Contact Center -- Call toll free at 1-866-628-HCTC (1-866-628-4282).  TDD/TTY callers 1-866-626-HCTC (1-866-626-4282).  The Hours of operation are 7:00 AM to 7:00 PM Central time, Monday through Friday.

C. The HCTC Web site -- The Web site is (http://www.irs.gov/individuals/article/0,,id=109960,00.html). 

D. The Health Assistance Partnership -- We can provide technical assistance to consumer health assistance programs who are assisting individuals at (202) 737-6340 or at (hdalin@healthassistancepartnership.org).  We also have an issue brief: The Health Insurance Tax Credit in the Trade Adjustment Assistance Reform Act of 2002, which is available at (www.healthassistancepartnership.org).