This is a printer friendly version.
General Information
Eligibility Requirements
- Am I eligible for the HCTC?
- What are the most common types of qualifying health plans for the HCTC?
- Can my family members be covered under the HCTC?
- If I am getting Medicare, am I still eligible for the HCTC?
- I receive my benefit from the PBGC annually rather than monthly. Am I still eligible for the HCTC?
- I received my entire PBGC benefit as a lump-sum payment. Am I still eligible for the HCTC?
- If I am receiving Social Security Administration (SSA) benefits as a result of a disability, am I eligible for the HCTC?
How the HCTC Works
- Does the HCTC affect my pension?
- Once the PBGC takes over my pension plan, what’s the earliest date I would be eligible for the HCTC tax credit?
- How and when does the HCTC get notified that I’m an eligible PBGC pension recipient?
- How can I receive the HCTC?
The Monthly HCTC
The Yearly HCTC
- How does the yearly HCTC work?
- If I don’t own taxes, can I still receive the HCTC?
- Do I (the retiree) need to change my withholding?
Legislative Changes that Help
Learn More
General Information
Q: What is the HCTC?
A: The HCTC was established to help cover the cost of health insurance for workers who lose their jobs due to foreign trade and individuals whose pensions are trusteed by the PBGC. It is a federally funded program administered by the IRS that pays 80% of qualified health insurance premiums for eligible individuals and their family members.
Eligibility Requirements
Q: Am I eligible for the HCTC?
A: To receive the HCTC, you must be:
- Receiving pension payments from the PBGC currently or have received a lump sum payment from the PBGC after August 5, 2002
- Age 55 or older and not enrolled in Medicare
- Enrolled in a qualified health plan
You must all meet a set of general requirements.
Q: What are the most common types of qualifying health plans for the HCTC?
A:
- Most COBRA plans or certain types of VEBA’s: You must pay more than 50% of your COBRA premium to receive the HCTC. Not all VEBAs qualify for the HCTC. Please see the HCTC Program Kit of for more information.
- State-Qualified Health Plan: Health plans approved by a State’s Department of Insurance. View the list of state qualified health plans to learn more about the state qualified health plans offered by your state.
- Spousal coverage: Coverage under your spouse’s plan. Your spouse must pay more than 50% of the total monthly premium in order for the plan to qualify.
Q: Can my family members be covered under the HCTC?
A: Yes. Your family members can receive the HCTC if they:
- Are claimed as a dependent on your federal tax return (excluding spouses)
- Do not receive Medicare, TRICARE, or CHIP (Children’s Health Insurance Program) benefits
- Are enrolled in a qualified health plan
Q: If I am getting Medicare, am I still eligible for the HCTC?
A: No. Other situations in which you cannot receive the HCTC include:
- You are not enrolled in a qualified health plan
- You do not pay more than 50% of your qualified health plan premium
- You are in prison
- You can be claimed as a dependent on another individual’s federal tax return
Please note that although you cannot receive the HCTC if you are enrolled in Medicare, your family members could. For more information on this important change, visit the IRS HCTC Web site.
Q: I receive my benefit from the PBGC annually rather than monthly. Am I still eligible for the HCTC?
A: Yes. You maybe be eligible for the HCTC if you receive your annuity from the PBGC annually and if you are still an eligible PBGC recipient once you reach the age of 55. However, please note that you must still meet all other eligibility requirements.
Q: I received my entire PBGC benefit as a lump-sum payment. Am I still eligible for the HCTC?
A: Yes. However the following conditions must be met:
- The PBGC trusteed your plan on or before the date you received your lump sum payment
- You received your payment after August 5, 2002 and are at least 55 years or older. If you were not yet 55 when you received your lump-sum payment, you must wait until you reach that age to be able to take advantage of the HCTC
Q: If I am receiving Social Security Administration (SSA) benefits as a result of a disability, am I eligible for the HCTC?
A: The receipt of benefits due to a disability does not automatically disqualify you. However, if you are receiving Medicare or Medicaid benefits along with SSA benefits, then you are not eligible for the HCTC.
How the HCTC Works
Q: Does the HCTC affect my pension?
A: No, it does not.
Q: Once the PBGC takes over my pension plan, what’s the earliest date I would be eligible for the HCTC tax credit?
A: The PBGC becomes responsible for your pension plan once your plan’s sponsor or plan administrator signs a Trusteeship Agreement with PBGC. As of the first day of the month the Trusteeship Agreement is signed, individuals who are age 55 or older become potentially eligible for the HCTC tax credit.
The PBGC provides the HCTC Program with information on trusteeships. You will receive an HCTC Program Kit in the mail once you are determined eligible.
To confirm your eligibility and begin the enrollment process, please look for the HCTC Program Kit in the mail. If you have any questions, call the HCTC Customer Contact Center toll-free at (866) 628-4282 or for TDD/TTY (866) 626-4282.
Q: How and when does the HCTC get notified that I’m an eligible PBGC pension recipient?
A: Each month the PBGC sends the HCTC a list of potentially eligible individuals. The list contains the names of all individuals who may be age 55 or older and receiving a pension benefit from the PBGC as of the first day of the month. The list also includes individuals who applied for a lump-sum payment after August 5, 2002, provided that their plan was trusteed by PBGC at the time of the lump-sum payment.
Please note that if you turn 55 after the first day of the month, your name will not appear on the list until the following month.
Q: How can I receive the HCTC?
A: You can receive the HCTC in one of two ways:
- Register for the monthly HCTC and receive help each month for your health insurance premiums as they become due
- Claim the yearly HCTC on your federal tax return. You will receive the tax credit as a refund or as a credit against taxes you owe.
The Monthly HCTC
Q: How does the monthly HCTC work?
A: The monthly HCTC helps you pay for health insurance as you go.
To enroll in the monthly HCTC, you must first complete the registration form that is included with your HCTC Program Kit. You will receive the HCTC Program Kit once the HCTC receives an eligibility record for you from the PBGC. Please mail the completed registration from along with any required supporting documentation back to the HCTC Program. It will be reviewed and if eligible, you will receive a welcome letter and your first invoice.
When you receive your invoice from the HCTC Program for 20% of your health insurance premium, send your payment to the HCTC Program by the due date each month. The HCTC Program adds 80% to your payment for a total of 100% of your premium that will be sent to your health plan.
Please note that on time payments are a must. If you do not submit a payment by the due date on your invoice, the HCTC will return the payment and you will pay 100% of your health plan premium for that month directly to your health plan.
Q: Can I receive both the monthly and yearly HCTC?
A: Yes. If you are a monthly participant, you can claim the HCTC at the end of the year for any months that you were eligible and had to pay 100% of your premium to your health plan. However, you cannot receive the yearly HCTC for any amount that you already received the monthly HCTC or reimbursement credit.
The Yearly HCTC
Q: How does the yearly HCTC work?
A: With the yearly option, you pay your health plan premiums in full and then claim the credit on your tax return. The credit will be applied as a refund or as a credit toward your year-end taxes.
To claim the yearly HCTC, you must meet all eligibility requirements outlined in the Program Kit. You pay 100% of your monthly premium to your health plan. Make sure to keep records of all payments. Then, at the end of the year, you complete and submit your Federal tax return along with IRS Form 8885. Along with your Federal tax return and the IRS Form 8885, you must submit additional required documentation, such as proof of payment for your qualified health plan (which can be in the form of cancelled checks). For a full list of required documentation, please consult IRS Form 8885.
Once the IRS processes your tax forms, you’ll receive 80% of your premium costs as either a tax credit or refund.
IRS Form 8885 is available on the IRS HCTC Web site. For guidance on how to fill out Form 8885, contact IRS at (800) 829-1040.
Q: If I don’t own taxes, can I still receive the HCTC?
A: Yes. Not owing taxes, referred to as zero tax liability, does not make you ineligible.
Q: Do I (the retiree) need to change my withholding?
A: PBGC cannot answer this question for you. Questions relating to whether or not to have monies withheld from your PBGC pension should be discussed with your tax preparer.
Legislative Changes that Help
Q: What are some of the changes to the HCTC from the 2009 American Recovery and Reinvestment Act (ARRA)?
A: The American Recovery and Reinvestment Act of 2009, also known as the Stimulus Bill, recently expanded the HCTC. The following are some of the key changes:
- The HCTC now pays for 80% of qualified health plan premiums
- Newly enrolled participants can request reimbursement for qualified health insurance payments they made while enrolling in the monthly program. For more information on the reimbursement credit, visit the IRS HCTC page Requesting Reimbursement.
- If you are eligible for the HCTC and your health plan is COBRA, you are entitled to have your COBRA benefits extended. You should work with your former employer or COBRA administrator to have these benefits extended.
- If you are eligible for the HCTC but receive a 65% COBRA Premium Reduction through your former employer or COBRA administrator- a new program also established by the Stimulus legislation - you are not eligible to receive the HCTC during that same month.
- Starting January 1, 2010, if the primary eligible individual enrolls in Medicare, passes away, or divorces from his or her spouse, family members can receive the HCTC for up to 24 months (or until December 31, 2010*) from the dates of these events.
*Please note that the ARRA changes are set to expire on December 31, 2010 unless re-authorized by Congress.
Learn More
Q: Where can I go to learn more about the HCTC?
A: To get additional information about the HCTC, visit the HCTC website. You can also call the HCTC Customer Contact Center toll-free at (866) 628-4282 or for TDD/TTY (866) 626-4282, 8:00am-5:00pm Central Standard Time (Monday-Friday).
