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- What is the tax credit?
- How much is the credit?
- Am I eligible for the tax credit?
- How and when does the HCTC get notified that I’m an eligible PBGC pension recipient?
- Once PBGC takes over my pension plan, what’s the earliest date I would be eligible to apply the for HCTC tax credit?
- What is an advanced HCTC?
- How do I get the credit?
- What is qualified health insurance?
- How can I get qualified health insurance?
- If I qualify for the Monthly tax credit option, how will I pay my health plan premium?
- Can family members of the eligible individual be covered under the HCTC?
- If I (the retiree) am getting Medicare, am I eligible for the credit?
- Now that I have Medicare is my spouse still eligible for the HCTC since she is not eligible for Medicare yet?
- I receive my benefit annually rather than monthly. Am I still eligible for the advance tax credit?
- I received my entire PBGC benefit as a lump-sum payment. Am I still eligible for the advance tax credit?
- Does the health coverage tax credit affect my pension?
- Is the health coverage tax credit through the PBGC?
- Do I (the retiree) need to change my withholding?
- Does the Health Coverage Tax Credit mean PBGC now has a health insurance program?
- I receive a PBGC benefit and am over 55, but I have health insurance through my current employer. Can I use the tax credit to pay for my contribution?
- If I am receiving Social Security Administration (SSA) benefits as a result of a disability, am I eligible for the HCTC?
- What is the Form 8885?
- Where can I get Form 8885?
- Can I get assistance filling out and filing a Form 8885?
- If I don’t owe taxes, can I still receive the HCTC?
- Where do I get more information?
Q: What is the tax credit?
A: The Health Coverage Tax Credit (HCTC) states that certain persons receiving PBGC benefits and family members may be eligible for this tax credit. For those eligible, it is a tax credit that can be used to pay 80% of the cost of your health insurance premiums, provided your health insurance is qualified health insurance. The HCTC became available for the first time in December 2002. It is available for all of 2003 and later years. The Internal Revenue Service, not the PBGC, administers the program, You can obtain more information by calling the HCTC Customer Contact Center toll-free at (866) 628-4282, or for TDD/TYY (866) 626-4282 or by checking the IRS Web site.
A: It is a tax credit that is equal to 80% of the health insurance premium for you and any eligible family member .
Q: Am I eligible for the tax credit?
A: You may be eligible for the tax credit if you meet the definition of a "potentially eligible PBGC pension recipient." You are considered a "potentially eligible PBGC pension recipient" if :
- You are age 55 or older, and
- Either,
- You are being paid a benefit by PBGC, or
- You received a lump sum payment from PBGC after August 5, 2002
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 PBGC as of the first day of the month. For example, if you turn 55 on August 14, your name will not be on the list until September. The list also includes individuals who applied for a lump sum payment after August 5, 2002 (and provided that their plan was trusteed by PBGC at the time of the lump sum payment).
Q: Once PBGC takes over my pension plan, what's the earliest date I might be eligible to apply for the HCTC tax credit?
A: PBGC becomes responsible for the 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, retirees in your plan, who are age 55 or older, become potentially eligible for the HCTC tax credit. They can apply for the Monthly HCTC tax credit by calling the HCTC Customer Contact Center toll-free at (866) 628-4282, or for TDD/TTY (866) 626-4282.
Assume that the Trusteeship Agreement was signed May 30, 2004. Anyone who was age 55 or older and receiving a benefit that is guaranteed by PBGC from the pension plan on May 1, 2004 is potentially eligible for the HCTC tax credit beginning in the month of May 2004.
Q: What is an advanced HCTC tax credit?
A: Most tax credits are paid out when you file your federal tax return. The advance credit option allows you to receive the HCTC tax credit in the form of a payment to your health plan administrator on a monthly basis.
A: You can apply for the credit by calling the HCTC Customer Contact Center toll-free at (866) 628-4282, or for TDD/TYY (866) 626-4282. You may also check the IRS Web site.
Q: What is qualified health insurance?
A: The Act defines qualified health insurance. For information about what is qualified health insurance and where to get it, call the HCTC Customer Contact Center toll-free at (866) 628-4282. TDD/TTY callers, please call (866) 626-4282. For a list of state sponsored qualified plans, see the IRS Web site.
Q: If I qualify for the advance tax credit option, how will I pay my health plan premium?
A: Here's how it works: You need to apply for the Monthly credit and make sure you've enrolled in a qualified health plan. Once you register and are accepted into the HCTC program, the HCTC will send you an invoice for your monthly insurance payment. This payment will be the portion for which you are responsible.
When the HCTC program receives your payment, they will send it to your health plan insurance administrator along with the government's portion, which is the 80% tax credit amount. IT IS IMPORTANT that you pay your 20% share of your qualified health insurance premium to the HCTC program on time.
Q: Can family members of the eligible individual be covered under the HCTC?
A: Yes. The person receiving the PBGC benefit can buy family health insurance coverage for the spouse and children who can be claimed as dependents on the eligible individual's tax return.
When the person receiving the PBGC benefit is no longer eligible for the HCTC tax credit, under certain circumstances family members can still benefit from the tax credit. For additional information and guidance, call the HCTC Customer Contact Center toll-free at (866) 628-4282, or for TDD/TTY (866) 626-4282.
Q: If I (the retiree) am getting Medicare, am I eligible for the credit?
A: No, if you are getting Medicare, or Medicaid, you are not eligible for the health coverage tax credit. If you have additional questions, you should call the HCTC Customer Contact Center toll-free at (866) 628-4282. TDD/TTY callers, please call (866) 626-4282.
Q: Now that I have Medicare is my spouse still eligible for the HCTC since she is not eligible for Medicare yet?
A: If you are now eligible for Medicare, under some circumstances she may still be eligible. For additional information and guidance, call the HCTC Customer Contact Center toll-free at (866) 628-4282, or for TDD/TTY (866) 626-4282.
Q: I received my entire PBGC benefit as a lump-sum payment. Am I still eligible for the advance tax credit?
A: If you received your lump-sum payment from the PBGC on or after August 5, 2002 you may be eligible. In addition, as of the current date you must also have attained age 55 and have qualified health insurance. If you were not yet 55, when you received your lump-sum payment, you must wait until you turn 55 to be able to take advantage of the advance tax credit.
If you received the lump sum before PBGC became trustee of the plan and you have no additional PBGC benefit, you are not eligible for the HCTC tax credit.
Q: Does the health coverage tax credit affect my pension?
A: No, it does not.
Q: Is the health coverage tax credit a PBGC program?
A: No, it is not. The HCTC program is administered by IRS. For additional information and guidance, call the HCTC Customer Contact Center toll-free at (866) 628-4282, or for TDD/TTY (866) 626-4282.
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.
Q: Does the Health Coverage Tax Credit mean PBGC now has a health insurance program?
A: No, it does not. ERISA does not give PBGC the authority to operate a health insurance program. The HCTC was established by the Trade Adjustment Act of 2002 and is administered by IRS.
Q: If I am receiving Social Security Administration (SSA) benefits as a result of a disability, am I eligible for the HCTC?
A: Eligibility for the HCTC is determined by several factors. If you are receiving Medicare or Medicaid benefits along with SSA benefits, you are not eligible for the HCTC. The receipt of a SSA benefit by itself does not disqualify you from the HCTC program.
A: Form 8885, Health Insurance Credit for Eligible Recipients, is the IRS form that needs to be completed and submitted with your federal income tax return in order to get a tax credit refund from IRS. The instructions for the Form 8885 provide guidance as to who may claim the Health Coverage Tax Credit. If you have any questions, you should call IRS for guidance at (800) 829-1040.
A: Starting in December of each year, you should be able to get this form by calling IRS at (800) 829-3676 or on the IRS Web site . You can also call the IRS toll-free information number, (800) 829-1040.
Q: Can I get assistance filling out and filing a Form 8885?
A: For guidance on how to fill out the Form 8885, contact IRS at (800) 829-1040.
Q: If I don't owe taxes, can I still receive the HCTC?
A: Yes, not owing taxes, referred to as zero tax liability, does not mean you are not eligible for the HCTC. You will have to file a form 1040, with IRS Form 8885, if you claim the credit on your federal tax return.
Q: Where do I get more information?
A: To get additional information, call the HCTC Customer Contact Center toll-free at (866) 628-4282, or for TDD/TTY (866) 626-4282, 8:00 a.m. to 5:00 p.m. Eastern Time (Monday - Friday). You can also get additional information on the IRS Web site . A brochure is available that provides additional information about the advance credit. Call the HCTC Customer Contact Center for a copy.
