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.
To qualify, the premium must be deducted from the retiree’s pension check and remitted directly to the healthcare provider or insurance company.
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 4B.
Instructions on claiming the reduction are included in IRS Publication 575 (page 6), which is available by clicking on the link (IRS Publication 575 (Page 6), Information on HELPS Act) below. 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.
Let’s do what we can to ensure that our retired members can take advantage of this tax break for retiree medical insurance.
IRS Publication 575 (Page 6), Information on HELPS Act