HCTC: The Yearly HCTC

With the Yearly HCTC, you pay your health plan premiums in full, directly to your health plan, throughout the year and then claim the credit on your federal income tax return. After the IRS processes your tax return, the credit will be applied to your taxes due or, if it is more than the taxes you owe, it will be issued as a refund. This page provides general information on how the Yearly HCTC works.

Tax Credit Percentage
Due to the Trade Adjustment Assistance Extension Act of 2011, the HCTC tax credit percentage increased from 65% to 72.5%, retroactively to February 13, 2011. You can claim 80% of your payments for qualified health insurance premiums for January or February 2011 coverage and 72.5% of your payments for March through December 2011 coverage.  

Additional 7.5% Retroactive Credit Amount
If you received the 65% tax credit through the monthly HCTC program or through the National Emergency Grant (NEG) Bridge Program, in any month from March through December 2011, you are eligible to receive an additional 7.5% retroactive credit on your federal income tax return.  For information on how to claim the additional credit, please go to the HCTC Information for Yearly Filers page.

How the Yearly HCTC Works
To receive the Yearly HCTC, first confirm that you meet all HCTC eligibility requirements by going to the eligibility requirements page. The PBGC or your state must have notified the HCTC Program that you met the HCTC candidate requirements for each month in which you plan to claim the Yearly HCTC. If you were identified as a candidate for the tax credit, you should have received the HCTC Eligibility Certificate in the mail.

To receive the Yearly HCTC, pay your qualified health plan premiums in full throughout the year, then complete and submit Form 8885 and all required supporting documents with your federal income tax return.  Once the IRS processes your tax return, the credit will be applied to your taxes due or, if it is more than the taxes you owe, it will be issued as a refund.

You do not need to fill out the HCTC Monthly Registration Form to claim the Yearly HCTC on your federal income tax return. Please note that if you have a foreign address outside United States or its territories, you will not receive an HCTC Eligibility Certificate in the mail. Therefore, you should contact the HCTC Program to determine if you are eligible for the tax credit.

You can claim the Yearly HCTC if one of the following apply:

• You met the HCTC eligibility requirements during the calendar year, made payments directly to a qualified health plan, and did not receive the Monthly HCTC.
• You received the Monthly HCTC but also made some payments directly to your qualified health plan. You can claim the Yearly HCTC on your federal income tax return for the payments you made directly to your qualified health plan.
• You received the 65% tax credit through the monthly HCTC program or through the National Emergency Grant (NEG) Bridge Program, in any month from March through December 2011.  If so, you are eligible to receive an additional 7.5% retroactive credit on your federal income tax return.  For information on how to claim the additional credit, please go to the HCTC Information for Yearly Filers page.
• You are a family member who would like to receive the Yearly HCTC due to a PBGC payee or TAA, ATAA, or RTAA recipient's enrollment in Medicare, divorce, or death.   Please go to the qualified family members page  for more information on claiming the Yearly HCTC.

Go to HCTC: Information for Yearly Filers for information on how the claim the Yearly HCTC.

To learn more about the monthly HCTC program, go to the monthly HCTC page.

Return to the HCTC Eligibility Requirements page.

Return to the HCTC Program home page.
Go to the HCTC Quick References page to view a glossary of terms, frequently asked questions and additional resources.