Information Bulletin

HELPS Tax Break for Police and Fire Retiree Medical Insurance Payments

November, 2023

Please be sure your retired members are aware that they may reduce their taxable earnings by up to $3,000 for medical insurance premiums paid during a calendar year.  This is allowable under the Healthcare Enhancement for Local Public Safety Retirees Act, or the “HELPS” Retiree Act.

Previously, there was a requirement that the premium had to be deducted from the retiree’s pension check in order to qualify for HELPS credit.  That is no longer the case following the adoption of the federal Secure 2.0 retirement law.  Any premium paid for health, accident or long-term care insurance qualifies for the credit.

Note that the $3,000 reduction does not appear on the annual 1099R form that is sent out by the pension fund.  The retiree must claim the reduction on his or her personal 1040 tax form on Line 5B or similar adjustment.    Instructions on claiming the reduction are included in IRS Publication 575 (page 7), which is reproduced on page 2 of this IPPFA Information Bulletin.  As this is not a simple matter, it is recommended that pensioners consult with their tax preparer to properly claim the reduction.  If your pension benefits are administered by a pension administration company, you may obtain additional information by contacting that company.

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