Pension Protection Act of 2006
Pension Plan Distributions for Health Insurance Premiums

The new federal Pension Protection Act enacted August 17, 2006 (PPA) law allows eligible public safety officers to make an election to direct FPPA to make pension plan distributions directly to a health insurance provider or group insurance provider to pay the cost of qualified health insurance premiums on behalf of the Member, his or her spouse, or dependent(s).  Up to $3000 of such distributions from the Member’s pension plan are then excludable from federal taxable gross income annually.  Beneficiaries receiving distributions under these plans are not eligible for this exclusion. 

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Social Security Exclusion for Public Employees

As we have previously reported, FPPA has been a leader in opposing mandatory federal social security coverage for public employees. There has been a long history of exclusion of these employees from the federal system; and benefit systems, such as FPPA, have been specifically designed to better meet the needs of public employees, such as firefighters and police officers. Required inclusion in the Social Security system would mean one of two things for new FPPA Members and their Employers: an increase in the total amount paid out in retirement premiums or a reduction in the benefits received upon retirement.

FPPA received good news when the President’s Commission of Social Security issued its report in fall of 2005. The possibility of mandatory Social Security was not even included in the report as a discussion item.

There is one organization in particular that continues to push hard for mandatory Social Security for newly hired state and local government workers. Surprisingly, it is an organization that FPPA may even share members with – the American Association of Retired Persons (AARP). Those FPPA members who are also members of AARP may wish to consider contacting that organization.

For more information on this issue, please visit www.retirementsecurity.org. Included under the “Impact and Positions” page are many interesting reports with regard to FPPA and other Colorado pension programs.

And then later in 2005 Representative E. Clay Shaw, R-Fla., in a recent Social Security reform bill (H.R. 3497) proposed further relief for certain local and state government pension participants. His bill, among other things, would cut the government pension offset – which reduces by half a spousal Social Security benefit when he or she receives a pension from a job not covered by Social Security. You can find out more information on the current status of this bill, through the Library of Congress, at http://thomas.loc.gov/.