President Signs Into Law Spanberger’s Bipartisan Legislation to Protect Tax Credits of Retired Police Officers, Firefighters

Law is named after Culpeper, Virginia Resident Wally Bunker — A Retired Police Lieutenant Negatively Impacted by an Inability to Access Pre-Tax Health & Long-Term Care Insurance Benefits

WASHINGTON, D.C. — President Joe Biden last week signed into law U.S. Representative Abigail Spanberger’s legislation to ensure parity for all retired police officers and firefighters and provide access to a key tax benefit that helps them cover their health insurance premiums.

Many public safety officers retire earlier than Americans in other occupations because of the physical demands and unique job hazards they face on the job. Unfortunately, when they retire early, many lose access to their employer-sponsored health coverage but are still years away from Medicare eligibility. To prevent high out-of-pocket health insurance costs, Congress included in the Healthcare Enhancement for Local Public Safety (HELPS) Retirees Act a provision that allows retired public safety officers to withdraw $3,000 tax-free from their pension plan annually to pay health or long-term care insurance premiums. However, the 2006 law required that pension plans pay the $3,000 directly to the insurer — but many smaller pension plans use a third-party system for disbursing payments, therefore preventing many retirees from accessing the benefit.

Spanberger’s legislation removes the requirement that pension fund distributions must go directly to the insurer to be eligible for tax-free status — and it makes sure that retired first responders can access a critical tax benefit to help cover health and long-term insurance. This provision is based on her Wally Bunker Healthcare Enhancement for Local Public Safety (HELPS) Retirees Improvement Act.

The bipartisan Wally Bunker HELPS Retirees Improvement Act is named after Wally Bunker, a 74-year-old retired police officer now living in Culpeper, Virginia — in Spanberger’s district. Bunker was a Police Lieutenant for the Suffolk Police Department in Suffolk, Virginia for nearly 22 years — where he served in patrol, investigations, internal affairs, communications, and undercover cases. Since his retirement and the passage of the original HELPS Retirees Act, Bunker has been unable to access the pre-tax benefit for health and long-term insurance due to the direct payment requirement. The City of Suffolk uses a third-party company for retirement distributions to insurance providers — meaning he is currently excluded from the benefit.

“I cannot express how much I appreciate Rep. Spanberger’s efforts to garner bipartisan support and introduce legislation in the House that proved to be the catalyst to prod the Senate to introduce similar bipartisan legislation that rights an unfair practice,” said Bunker. “Rep. Spanberger and her wonderful staff quickly realized this was neither a Seventh District nor a Virginia issue but affected tens of thousands retired public safety personnel nationwide. Rep. Spanberger shows that she is strongly committed to helping constituents deal with government bureaucracy. I am deeply indebted to her for her tenacity and team building with the FOP, other law enforcement fraternal organizations and members of Congress from both parties to see this to a successful conclusion.”

“Virginia’s law enforcement officers and fire fighters routinely operate under immense pressures. The intense, day-to-day physical and psychological demands of the job push many of these public servants to retire early — often at a moment in their lives when they can neither access employer-sponsored healthcare coverage nor enroll in Medicare,” said Spanberger. “I’ve been proud to lead the charge to resolve this issue, and I want to thank Virginia Seventh District resident Wally Bunker for his advocacy on behalf of thousands of retired public servants like him. With this legislation now law, we are making sure that retired officers and fire fighters can cover their health insurance costs, no matter how their pension payment is disbursed.”

The Wally Bunker HELPS Retirees Improvement Act is endorsed by the National Fraternal Order of Police, International Association of Fire Fighters, and National Association of Police Organizations.

“We are so grateful that Representatives Spanberger and Chabot were successful in their effort to include a provision amending the Healthcare Enhancement for Local Public Safety (HELPS) Retirees Act in the omnibus spending bill and we’re excited to see it pass,” said Patrick Yoes, National President, Fraternal Order of Police. “Under current law, eligible retired public safety officers may use up to $3,000 per year from their qualified government retirement plan, on a pre-tax basis, to pay for health insurance or long-term care insurance premiums.  However, in order for these officers to get the pre-tax benefit, the money must be paid directly from their pension fund to a health or long-term care insurance company. This requirement has proved to be unworkable for far too many eligible public safety and its repeal will allow all officers to receive this benefit, because they will be able to make the payments themselves.”

“Fire fighters work a dangerous and demanding job that can lead to them retiring before qualifying for Medicare. Our retirees living on a fixed income shouldn’t be penalized for their service by being forced to pay staggering amounts of money for health insurance. The IAFF applauds Representative Spanberger for her persistent leadership in expanding the HELPS program to assist our retired brother and sister fire fighters afford the healthcare services they need,” said Edward A. Kelly, General President, International Association of Fire Fighters. “We also look forward to working with Congress to develop a comprehensive solution to ensure retired fire fighters have access to affordable, high-quality health insurance options. Our retired brothers and sisters have sacrificed their own health in service to others, and our nation owes it to fire fighters to ensure they keep the dignified and healthy retirement that they have earned.”

Specifically, the Wally Bunker HELPS Retirees Improvement Act will:

  • Ensure that payments for health insurance premiums, whether through the pension system or a third-party system, are tax deductible,
  • Allow stipends to qualify for the income exclusion under IRS section 402(I), and
  • 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.

Spanberger and U.S. Representative Steve Chabot (R-OH-01) introduced the bipartisan legislation in March 2022.

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