Retired police officers and firefighters could see more tax relief in their future. A bipartisan bill introduced to Congress this week would make it easier for public safety retirees to access a tax benefit for their healthcare insurance premiums, according to a press release Monday from Rep. Abigail Spanberger (D-VA).
Spanberger, a former police officer, and Rep. Steve Chabot (R-OH) are sponsoring the bill.
“Many public safety officers retire earlier than people in other occupations because of the physical demands and unique job hazards they face on the job,” the release says. “Unfortunately, when they retire early, many lose access to their employer-sponsored health coverage but are still years away from being eligible for Medicare.”
The Wally Bunker Healthcare Enhancement for Local Public Safety (HELPS) Retirees Improvement Act would amend an existing provision to make it easier for public safety retirees to take advantage of a tax benefit. According to the release, many retirees have trouble using the benefit because some pension plans don’t pay directly to insurance providers – a requirement of the current policy to withdraw $3,000 tax-free from a pension plan annually. The bill aims to update and remove this requirement.
The bill is named after Wally Bunker, a 77-year-old retired police lieutenant in Spanberger’s district. Bunker has been unable to take advantage of the pre-tax benefit because of the direct payment requirement, according to the release.
“Passage of this proposed legislation would finally level the playing field for all retired public safety personnel who receive a pension but don’t have the option of premiums being paid from the pension fund directly to healthcare providers,” said Bunker. “I want to thank Congresswoman Spanberger for her willingness to champion this bill, along with the bipartisan support from cosponsor Congressman Steve Chabot, plus the hard work of the Fraternal Order of Police to support this legislation — which is based on fairness by treating all public safety retirees alike.”
The Wally Bunker HELPS Retirees Improvement Act has been endorsed by the National Fraternal Order of Police, the release says.
According to lawmakers, the Wally Bunker HELPS Retirees Improvement Act would enact the following:
- Ensure that health insurance premiums, whether through the pension system or a third-party system, are tax deductible.
- Raise the tax credit from $3,000 to $6,000 to account for rising healthcare premiums.
- Ensure that stipends qualify for the income exclusion under IRS section 402(I).
- Help alleviate the burden imposed on public pension plans of having to interact and coordinate with numerous insurance companies on behalf of the related public safety retiree.