| |
| The HELPS Retirees Act: |
11/17/2006 |
| |
On 17 August, President George W.
Bush signed H.R. 4, the "Pension Protection Act,"
into
law. The FOP waged an intense lobbying campaign to
insure that H.R. 4 also contained the text of H.R. 2177,
the "Healthcare Enhancement for Local Public Safety
(HELPS) Retirees Act."
The new law will provide a modest tax benefit to retired
public safety officers pay for health insurance by
allowing the use, on a pretax 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.
This provision is slated to go into effect on 1 January
2007.
With that said, the Internal Revenue Service (IRS) will
have final say on the how the HELPS Retirees law will be
administered and it is doubtful that the IRS will issue
its guidance by the time the legislation goes into
effect next year. The information provided here is based
on an analysis of the statute as enacted and the intent
of the FOP, which strongly supported the bill's passage.
Until such time as the IRS guidance is issued, we urge
that our members consult with their pension fund to see
how they intend to implement the new law.
What is the HELPS Retirees Act?
The Healthcare Enhancement for Local Public Safety
(HELPS) Retirees Act was originally introduced by
Representative Chris Chocola (R-IN) as H.R. 2177. The
FOP and other organizations representing public safety
officers helped to draft the legislation, which was
ultimately incorporated into H.R. 4, the "Pension
Protection Act," which was signed into law on 17 August
2006.
The Act will allow eligible retired public safety
officers to use up to $3,000 per annum from their
qualified government retirement plan, on a pre tax
basis, to pay for health insurance or long term care
insurance premiums. In order for you to get the pre tax
benefit, the money must be paid directly from your
pension fund to a health or long term care insurance
company.
How are public safety officers defined?
The law uses the same definition as the Public Safety
Officers Benefit Act and defines "public safety
officers" as law enforcement officers (including
corrections, parole, probation, and judicial officers),
firefighters, members of a rescue squad or ambulance
crew, or chaplains to a fire or police department.
Ultimately, the IRS or the Department of Justice may
further define who is eligible for this benefit. Until
then, eligibility may be a local decision and you should
consult your pension fund if you have any questions.
Am I eligible to take advantage of this benefit?
Public safety officers who have separated from service
as a public safety officer and have attained normal
retirement age or who are separated due to a disability
are eligible for the benefit. To take advantage of this
benefit, a retiree must be receiving his or her monthly
pension.
What if my fund doesn't use retirement age and
therefore doesn't have a definition for a "normal
retirement age?"
It is the position of the FOP that any employee who
meets the criteria for retirement established by their
plan would be eligible for the benefit, even if the plan
does not have a "normal retirement age." The IRS may
address this issue in their guidance.
I'm eligible for this benefit?-what do I do to to
receive it?
If your plan has not notified you about the process for
taking advantage of this benefit, contact your pension
fund and ask about the HELPS Retiree $3,000 pre tax
benefit for purchasing health insurance or long term
care insurance.
What health insurance or long term care insurance
premium qualifies for the pre tax payments?
The Act defines long term care insurance, but does not
define accident or health insurance. The FOP believes it
is reasonable to consider any employer or pension fund
sponsored health plan as a qualifying plan.
Additionally, Medicare Part B, Medicare Advantage,
Medicare Part D, and Medicare supplemental insurance
premiums would qualify. Individually purchased health,
dental, and vision plan premiums would also qualify.
Members take advantage of the benefit are reminded that
the premiums must be directly deducted from your pension
check in order for the HELPS Retirees Act to apply.
What pension money can I use?
Defined benefit, 403(b), or 457 plans are eligible for
the favorable tax treatment. The amount is limited to
$3,000 per annum and must be directly disbursed to your
health and long term care insurance company.
What should I do if my pension fund will not
establish a program or process to allow me to take
advantage of this benefit?
The HELPS Retirees Act does not require pension funds to
make this benefit available. Further, if your pension
fund chooses to establish a program or process to allow
eligible public safety officers to take advantage of
this benefit, they can place some limitations on it. If
your fund opts not to participate in HELPS Retirees or
places unreasonable limitations, the FOP suggests you
contact your local or State Lodge and urge the fund's
administrator and trustees in writing to establish a
program or process so that you may receive this benefit.
|
|
