ELGIN, ILLINOIS (November 17, 2021) — “I want to pay more income taxes this year” is a statement you'll likely never hear, yet thousands of retired first-responders do just that because they are not aware of a deduction to which they are entitled by federal law.
The Illinois Public Pension Fund Association (IPPFA) is reminding retired public-safety officers about the Healthcare Enhancement for Local Public Safety Retirees Act, or the “HELPS” Retiree Act. This act allows retired law-enforcement officers, fire-fighters, and emergency-services personnel to lower their taxable-pension income by excluding premiums for health insurance. These retirees may reduce their taxable earnings by up to $3,000 for medical insurance-premiums paid during a calendar year.
“This is a valuable tax-deduction and we want to be sure that police, fire, and EMS retirees throughout Illinois and the country take advantage of this opportunity,” said IPPFA President James McNamee. “Understanding this deduction will help these first-responders to plan and execute a more successful retirement.”
To qualify for the HELPS deduction, the premium must be deducted from the retiree’s pension check or another eligible government plan maintained by the employer, such as a deferred compensation distribution, and remitted directly to the health-care provider or insurance company. The $3,000 reduction does not appear on the annual 1099R form that is sent out by the pension or retirement fund. The retiree must claim the reduction on his or her personal 1040 tax form. Instructions on claiming the reduction are included in IRS Publication 575, General Information/Insurance Premiums for Retired Public Safety Officers.
Since claiming the deduction is not a simple matter, it is recommended that pensioners consult with their tax-preparer to properly make the claim. If the health insurance-premium payment is to be made from a deferred-compensation plan, the plan administrator will have the information that is needed.
The IPPFA was founded in 1985 as a not-for-profit organization whose mandate was to educate public pension-fund trustees. In 2009 the IPPFA became the primary education-provider for public pension-fund trustees in the state of Illinois, and its members manage more than $18 billion in pension-assets.
