Pension Protection Act of 2006
The Pension Protection Act of 2006 (PPA) includes a number of provisions applicable to public pension plans. We have received numerous calls and questions about the PPA, most concerning the federal income tax exclusion for certain retiree health and long-term care insurance premiums. The information presented here reflects FPPA’s understanding of the health care premium tax exclusion based on information available at this time.

Read more about this Act in the FPPA PensionCheck Newsletter - Volume 3 - 2007.

Healthcare Enhancement for Local Public Safety (HELPS) Provision
This component of the PPA grants eligible retired public safety officers an annual federal income tax exclusion of up to $3000 for amounts paid to cover the cost of qualified health insurance premiums on behalf of the member, his or her spouse, or dependents. To qualify, premiums must be paid through payroll deduction directly from the member’s pension plan benefits. Beneficiaries receiving direct distributions from a member’s pension plan are not eligible for the exclusion. Each member may only take one $3000 exclusion annually, even if they are receiving more than one type of eligible pension. Moreover, the member’s monthly pension benefit must be equal to or greater than the amount of the member’s monthly insurance premium.

Information about member eligibility, how the tax exclusion is claimed, and options for direct payments are covered in the following publication. Pension Protection Act of 2006 Q&A Updated December 28, 2007

IRS Forms: After reading the Pension Protection Act of 2006 Q&A publication above and need to find the IRS forms referred to in Question #11 (1040, 1040A or 1040NR) click here. It is helpful to refer to the instructions provided by the IRS with each form in order to identify which form you should use.
Currently, there are 3 categories of health insurance programs
for which FPPA can make direct premium payments through deduction from a member’s pension benefit.
Employer Group Health
or FPPA Sponsored Insurance Programs
AARP Medicare
Supplement Insurance Plans
and / or the
AARP MedicareRx Plans
insured through UnitedHeathcare
Individual Third Party
Insurance Programs
Updated Sept. 16, 2008

There are several employer group health or FPPA sponsored insurance programs for which FPPA is currently withholding and paying monthly insurance premiums for retirees.

CLICK HERE for a list of these group plans.

If you are an employer offering a group plan that is not listed or a member enrolled in an employer group plan that is not listed, we strongly encourage you to contact FPPA for more information as to how your group plan can qualify for participation in this program.

FPPA has now made arrangements for the direct payment of insurance premiums for retirees enrolled in the AARP Medicare Supplement Insurance Plans and/or the AARP MedicareRx Plans insured through UnitedHealthcare.  The program became effective October 1, 2007, and is only available to FPPA members age 65 or over whose monthly insurance premium(s) do not exceed their monthly pension benefit. 

CURRENT UHC POLICYHOLDERS

If you are already enrolled in an
  • AARP Medicare Supplement Insurance Plan

and/or an

  • AARP MedicareRx Plan

insured through UnitedHealthcare and wish to enroll in the FPPA Premium Deduction Program CLICK HERE.

- OR -

RETIREES WISHING TO ENROLL

If you wish to enroll in an
  • AARP Medicare Supplement Insurance Plan

and/or an

  • AARP MedicareRx Plan

and wish to take advantage of the PPA tax exclusion CLICK HERE.

FPPA has expanded the premium withholding program to include retirees having individual policies with third party insurance carriers who comply with FPPA requirements.

CLICK HERE for the steps to follow in order for your insurance carrier to enroll in the program.

General Information Regarding PPA and the HELPS Provision

Federal Pension Protection Act of 2006
This is an actual copy of the Act from the 109th U.S. Congress featuring Section 345 regarding the healthcare deduction.

Federal Pension Protection Act - Notice 2007-7 Changes
Given the complexity of the Pension Protection Act - this publication provides more in-depth information primarily related to distributions.