Both President Bush and his challenger, Sen. John F. Kerry (D-Mass.), have included tax credits in their plans to slow the rising cost of health care and provide coverage for more Americans.

But the track record of an existing health care tax credit, designed to help an estimated 250,000 manufacturing workers who lost their jobs to foreign competition, is not encouraging, policy experts say.

Congress in 2002 enacted the health coverage tax credit to cover 65 percent of the health insurance premiums of those eligible. But despite efforts by Bush administration and state-level officials to publicize the benefit, only a small fraction of the expected beneficiaries have claimed the credit, officials said.

According to the IRS and the Government Accountability Office, about 12,500 taxpayers claimed the health coverage tax credit on their 2003 returns and 6,000 more took it as an advance payment, or partly in advance and partly when they filed their returns.

They received $37 million in benefits, which averaged between $168 and $231 a month per recipient, the GAO said. That's in contrast to the $294 million the program was expected to cost that year.

The GAO noted that it cost the IRS $69 million to set up an office to administer the credit, and that it would cost the tax agency about $40 million a year to operate its part of the program.

This year, about 13,000 are enrolled in the advance payment program. It's unclear how many more will claim the credit when they file next spring, but the number "remains a small portion of those initially identified . . . as eligible," the GAO said in a recent report. Taxpayers have the option of waiting until the end of the year to claim the credit, so the figures may rise in spring when returns come in.

The GAO report said 505 people in Virginia were enrolled in July out of an eligible 6,541. In Maryland, 577 enrolled out of 5,269 eligible. In the District, none of the 86 people considered eligible applied for the credit.

Critics of the program say the response has been limited because the credit is too complex and places too much burden on the intended beneficiaries. It can take months for an application to go through several layers of review at the state and federal levels, and during that time, the jobless person must pay the entire insurance premium -- something many cannot do.

Government agencies and advocacy groups blame one another for the problems. The Labor Department said it merely certifies the employers for general eligibility; the IRS said it is simply enforcing the law; an AFL-CIO official said "there is something drastically wrong with the implementation of the program," and a Virginia Employment Commission official said, "There's enough blame to go around."

Stan Dorn of the Economic & Social Research Institute, a research group focusing on the improvement of social service programs, concluded in a recent report that the credit could be made more generous and easier to claim. "If policymakers wish to adjust [the credit] to better accomplish key policy goals, viable strategies are available," he said. A bipartisan effort to enlarge the credit and ease eligibility rules failed in the Senate last spring.

The credits "provide the first test of whether the uninsured can be helped effectively" by credits that are both refundable -- meaning they are paid whether or not the person owes taxes -- and that are paid directly to insurers, Dorn said. This is a "policy mechanism that has been included, perhaps more than any other, in proposals by both Democrats and Republicans to cover millions of uninsured Americans," Dorn said.

For policymakers, a key question is to what extent the lack of participation is the result of poor design in this particular program, or whether it is inherent in the approach -- using the tax code to help insure people.

Complexity is a growing problem as the government increasingly turns to the tax system as a channel for social programs. The earned income tax credit, the largest assistance program for working Americans, has been plagued by errors for many years.

In addition to the credit, the government offered grants to help families stay afloat until their applications were processed. Special kits were sent to workers who appeared to be eligible, informing them of the credit, which pays up to 65 percent of the health insurance premium.

The tax credit could be applied to individual insurance policies; COBRA benefits, under which a laid-off worker can continue on the former employer's plan but must pay the premium; or, in certain cases, coverage through a spouse. In some cases, retirees too young for Medicare could claim it.

Experts who have followed the evolution of the credit from theory to reality say there have been difficulties. "There are lots of problems with the [health coverage] credit," said Edwin Park, a health policy analyst with the Center on Budget and Policy Priorities. "Some of it is the design of the credit itself, some is the implementation."

On the design side, a key problem is cost.

Although the credit for 65 percent of insurance premiums is considered generous, many beneficiaries cannot afford to pay the rest, Dorn said. "That's a critical problem for the uninsured generally," he said. "Two-thirds of the uninsured are low-income." Further, Dorn said, "there's a cash flow problem" for new participants who must pay 100 percent of the premium while their application is processed.

State officials said there are other, related problems. For example, some beneficiaries are required to be in job-training programs. But some of those shut down in summer, leaving participants to pay all of their premiums until the program reopens in the fall.

And finally, complexity is an issue. To get the advance credit, beneficiaries must get written approval from their state employment agency, their health insurer and the IRS.

"It's confusing for people and difficult. We know from lots of research . . . that the harder you make it for someone to claim a benefit, the fewer people will claim the benefit," Dorn said. The GAO made a similar point, noting "the fragmentation and complexity" of the eligibility process, along with the time lag, typically three to six months, during which the person must pay the full premium.

And some of those who did apply, it turns out, were not eligible. In Virginia, computer program errors and what the state called "a drafting error in the authorizing legislation" led the state to certify more than 3,500 ineligible taxpayers, one official said. About 100 of those ineligible workers took the credit, and a few of them recently received letters from the Internal Revenue Service demanding return of the money.

One Virginian, who spoke only on condition of anonymity, said the IRS wrote telling him to return more than $500 or he would be charged interest. "They made a mistake and I need to pay the money," he said, noting that he took early retirement and is trying to make ends meet on $1,128 a month.

This week, the tax agency said it has suspended those collection efforts. Instead, IRS officials said, they are in talks with the Labor Department, which is casting about for a legal way to offer relief to the jobless workers -- in effect, letting them keep the incorrect payments.

Other incorrect or improper claims were widely distributed across the country, IRS officials said, adding that they are still being reviewed.