WASHINGTON,
DC –
U.S. Senators Sherrod Brown (D-OH), John Thune (R-SD), Mark Warner (D-VA), and
Chuck Grassley (R-IA) introduced legislation to allow
retired first responders to withdraw from their retirement without being
penalized. The senators’ legislation would improve and reform the
Healthcare Enhancement for Local Public Safety Act (HELPS), by changing state
and local direct payment requirements from mandatory to optional, and creating
an alternative to the current method, allowing the retirement system to make
the distribution to the retired public safety officer. The retiree can then
make the premium payment to the provider and remain eligible for the tax
exclusion.
“Ohio firefighters and other first responders wear their bodies
out protecting our families and communities, and they shouldn’t have to worry
about being penalized for withdrawing from retirement that they’ve earned,” said Senator
Brown. “This is a simple solution that allows first responders to keep
their own money and alleviate pressure on state and local governments.”
“We
owe a great debt of gratitude to our retired police officers, firefighters, and
other first responders who dedicated their lives to protecting our communities
and keeping our friends, families, and neighbors across South Dakota safe,” said Senator
Thune. “Currently, it is extremely difficult for retired first responders to
utilize an existing benefit that helps cover certain health care expenses,
which is why I introduced this legislation that would ensure these retirees can
make tax-free withdrawals from their pension and direct those amounts to
qualifying insurance premiums.”
“Virginia’s first responders put themselves at risk every day to
protect our communities – the least we can do is ensure that they are taken
care of in retirement,” said Senator Warner. “I’m proud to introduce the
bipartisan Police and Fire Health Care Protection Act of 2022, which will make
it easier for tens of thousands of retired officers – like Mr. Wally Bunker, a
stalwart advocate and retired police officer from Culpepper – to claim the
benefits that they have earned.”
“First responders play a vital role in our communities, addressing
a variety of high-stress emergency situations throughout their careers. All
first responders ought to be able to take advantage of a tax benefit that is
intended to help them access health coverage in retirement,” said
Senator Grassley.
In order to implement the direct payment requirement under current
law, state and local retirement systems are now responsible for directly paying
often numerous health and long-term care providers and keeping track of changes
to premium amounts and payment deadlines for thousands and sometimes tens of
thousands of retirees. This already challenging task is made even more
difficult because providers will often communicate only with the retiree
policyholder and not with the retirement system. Information does not flow
seamlessly, and inadvertent errors are made. In addition, due to the
complexity, some retirement systems have made the decision to not implement HELPS,
thereby resulting in retired public safety officers covered by these pension
plans being ineligible for the tax benefit.
“Too often fire fighters are forced to retire early and have
no access to affordable health insurance. We owe it to our fire fighters and
EMS providers to help them access quality healthcare after making a career’s
worth of physical and mental sacrifices for our communities,”
said Edward Kelly, General President, International Association of Fire Fighters. “This legislation ensures our retired fire
fighters can access their hard-earned retirement income to pay for health
insurance costs. The IAFF thanks Senators Brown, Thune, Warner, and Grassley for their
commitment to supporting our retirees and helping them to maintain a healthy
and secure retirement.”
“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
health care and long-term care insurance,” said Patrick Yoes, National
President, Fraternal Order of Police. “However, too many public safety
officers 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 directly in order to
exclude these payments from the employee’s gross income. Officers whose
pensions are or came to be administered by third parties could not take
advantage of this tax break. We are very grateful to Senators Brown and Thune
for introducing legislation which repeals this direct pay requirement and
provides a modest increase to the benefit.”
“On behalf of Ohio’s and the nation’s public safety personnel we
are grateful to Senator Brown for his leadership on this issue. The new
legislation will ensure that first responders receive the assistance Congress
intended them to receive with their health care expenses in retirement,” said Mary Beth
Foley, Executive Director, Ohio Police & Fire Pension Fund (OP&F).
Under the senators’ bill, plans that are able to implement HELPS
through the current direct payment method, possibly because they have only one
or two providers to pay and a small number of retirees, may continue to do so.
However, for the many retirement systems that are experiencing administrative
problems with the current requirement or have refused to implement HELPS
because of the burdens, the senator’s legislation will allow them to make
distributions to their retirees without rendering the retiree ineligible for
the tax exclusion.
In cases where the distribution is made to the retiree, the
legislation would require the retiree to include with their tax return an
attestation that the amount sought to be excluded from the pension distribution
does not exceed the amount paid by the employee for qualified health insurance
premiums for the taxable year. The tax exclusion is capped under current law at
$3,000 per year.
The bill has been endorsed by the Fraternal Order of Police,
National Association of Police Organizations, and the International Association
of Fire Fighters.
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