Interlayer forward error correction (IL-FEC) coding constitutes an effective unequal error protection (UEP) scheme conceived for transmitting layered video over wireless channels. In contrast to traditional UEP schemes, it operates by embedding extra information concerning the base layer (BL) into the enhancement layers (ELs) without requiring extra transmission resources. The received EL packets assist in the decoding of the BL to reduce the distortion of the reconstructed video. The optimum scheduling of the IL-FEC coded layered video streaming in a truncated hybrid automatic repeat request (THARQ)-aided system is an open problem. Hence, in this paper, we conceive an adaptive THARQ (ATHARQ) algorithm for finding the most appropriate scheduling of the IL-FEC coded layered video packets for the sake of minimizing the video distortion under the constraint of a given total number of transmission time slots (TSs). Furthermore, we develop a method of online coding-rate optimization algorithm for our IL-ATHARQ transmission scheme to find the best FEC code rate distribution among the video layers that results in the lowest possible video distortion. When using a recursive systematic convolutional (RSC) code, our simulation results show that the proposed rate-optimized (RO) IL-ATHARQ system outperforms the traditional THARQ transmission scheme by about 5.3 dB of $E_{b}/N_{0}$ at a peak signal-to-noise ratio (PSNR) of 38.5 dB. Viewing the improvements in terms of the video quality, 2.5 dB of PSNR improvement is attained at an $E_{b}/N_{0}$ of 15 dB.
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