Health Coverage Tax Credit (HCTC) FAQs
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 a portion of qualified health insurance premiums for eligible individuals and their family members.
A: If you meet the following requirements, you may be eligible to receive the HCTC:
- Receiving pension payments from the PBGC currently or have received a lump sum total distribution of your PBGC benefit after August 5, 2002
- Age 55 or older and not enrolled in Medicare
- Enrolled in a qualified health plan
The IRS website provides a list of the general requirements you must meet to be eligible for the HCTC. For more information, or answers to your questions about the HCTC, please call 1-866-628-HCTC (4282) [Hearing impaired, call 1-866-626-4282].
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 website.
Q: I receive my benefit from the PBGC annually rather than monthly. Am I still eligible for the HCTC?
A: The frequency of your PBGC annuity payments (monthly, quarterly, annually, one-time lump sum total distribution) has no effect on your eligibility.
A: If you meet the following conditions you may be eligible:
- The PBGC trusteed your plan on or before the date you received your lump sum payment.
- You received a lump sum total distribution of your PBGC benefit 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.
If the lump sum you received from PBGC was a return of employee contributions rather than a total distribution of your PBGC benefit, it does not qualify you for HCTC.
However, the requirements for eligibility are administered by the IRS. Please check with the IRS's HCTC Customer Contact Center to confirm whether you are, in fact, eligible for the HCTC.
A: No, it does not.
Q: Once the PBGC takes over my pension plan, what's the earliest date I may 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 TTY/ASCII (American Standard Code for Information Interchange) (866) 626-4282.
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 received a lump-sum total distribution of their PBGC benefit 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.
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.
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: What are some of the changes to the HCTC from the 2009 American Recovery and Reinvestment Act (ARRA)?
A: The provisions related to the HCTC in the American Recovery and Reinvestment Act of 2009, also known as the Stimulus Bill, expired in February 2011. For more information, please contact the HCTC Customer Contact Center.
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 TTY/ASCII (American Standard Code for Information Interchange) (866) 626-4282, 8:00am-5:00pm Central Standard Time (Monday-Friday).
How the HCTC Works
The Monthly HCTC
Legislative Changes that Help