Spanberger, Chabot Introduce Bipartisan Bill to Protect Tax Credits of Retired Police Officers, Firefighters

Legislation 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

The Bipartisan Bill is Endorsed by the National Fraternal Order of Police & the National Association of Police Organizations

WASHINGTON, D.C. — U.S. Representatives Abigail Spanberger (D-VA-07) — a former federal law enforcement officer — and Steve Chabot (R-OH-01) this week introduced bipartisan legislation to allow retired public safety officers to receive relief on their annual tax returns for their healthcare insurance premiums.

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. Unfortunately, when they retire early, many lose access to their employer-sponsored health coverage but are still years away from being eligible for Medicare. To alleviate the burden of paying out-of-pocket for health insurance, 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.

The Wally Bunker Healthcare Enhancement for Local Public Safety (HELPS) Retirees Improvement Act addresses this major issue facing many retired police officers and firefighters in Virginia, Ohio, and across the country. Specifically, the legislation removes the requirement that pension fund distributions must go directly to the insurer to be eligible for tax-free status. It also raises the $3,000 deduction limit to $6,000.

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. Mr. 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 — therefore he is excluded from the benefit.

“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. “In Virginia, retired state police can avail themselves of the benefit, while many local government public safety retirees, who are paid pensions from the same state retirement system, cannot. 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.”

“To keep our communities safe, America’s law enforcement officers go above and beyond under immense pressure. Operating within these intense, day-to-day circumstances means officers must often retire early from the force due to the physical and psychological demands of the job. Unfortunately, this early exit means they can neither access employer-sponsored healthcare coverage nor can they enroll in Medicare,” said Spanberger. “We can take concrete, commonsense steps to resolve this issue. This includes making sure retired officers are able to use tax-free payments from their pension plans to cover health insurance costs, no matter how their pension payment is disbursed. I am proud to help lead the introduction of this bipartisan legislation to do just that — named after Virginia Seventh District constituent and retired police officer Wally Bunker. I want to thank Congressman Chabot for his partnership and his leadership on this issue, and I will keep working to make sure Virginia’s law enforcement receive the benefits they’ve earned for putting on the badge.”

“Our public safety officers risk their lives every time they put on their uniform. Often, they retire early due to the physical demands of the job which leads them to a lengthy gap of time prior to their Medicare eligibility. Our public safety officers have already done so much for their community, and they deserve a hassle-free retirement. That is why I have introduced the HELPS Retirees Improvement Act to ensure that all public safety retirees receive the tax benefit they deserve,” said Chabot.

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

“In 2006, Congress enacted the HELPS Retirees Act, which provided a modest tax benefit to help retired public safety officers afford health insurance by allowing the use, on a pre-tax basis, of up to $3,000 annually from their pension funds (including defined benefit plans and defined contribution plans) to pay for premiums on health care and long-term care insurance. The FOP was proud to have played a leading role in developing the legislation introduced today which addresses the issue faced by many public safety officers who are were ineligible or lost their eligibility for this benefit because of the law’s “direct pay” requirement. This means that the public pension system must pay the health or long-term care insurance company. This legislation would remove this requirement and allow all retired public employees to take advantage of this benefit, which they earned through their service to our communities, and increase the pre-tax amount from $3,000 to $6,000 per year” said Patrick Yoes, National President, National Fraternal Order of Police.

“The HELPS Retirees provision of the Pension Protection Act of 2006 provides public safety officers, who often retire earlier than other occupations because of the physical demands and unique job hazards they face, with means to more affordable healthcare options. The Wally Bunker HELPS Retirees Improvement Act will enhance this important provision and help ensure all public pension plans are able to implement it to the benefit of their public safety retirees. This bill will help preserve the retirement security and the health of those public servants who selflessly serve and protect our communities and we are committed to seeing these changes made into law. On behalf of the over 241,000 sworn law enforcement officers NAPO represents, we thank Representatives Chabot and Spanberger for their leadership and support,” said Bill Johnson, Executive Director, National Association of Police Organizations.

Specifically, the Wally Bunker HELPS Retirees Improvement Act would:

  • 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.


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