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Enhancing Healthcare Coverage for Public Safety Retirees
By: Eric Stanger, Via Benefits by WTW
Recent legislation has led to important improvements to the Healthcare Enhancement for Local Public Safety (HELPS) Retirees Act. Eric Stanger at Via Benefits by WTW explains these updates and how public safety retirees can take better advantage of the pre-tax distributions that they earned as public safety officers.
This is an excerpt from NCPERS Winter 2024 issue of PERSist, originally published January 16, 2024.Recent legislation has led to important improvements to the Healthcare Enhancement for Local Public Safety (HELPS) Retirees Act. Eric Stanger at Via Benefits by WTW explains these updates and how public safety retirees can take better advantage of the pre-tax distributions that they earned as public safety officers.
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Important improvements to the Healthcare Enhancement for Local Public Safety (HELPS) Retirees ActWhat is HELPS?
Since its passage in 2006, the HELPS Act has allowed retired public safety officers to benefit from an annual pre-tax distribution of up to $3,000 from a governmental retirement plan when funds were used to pay for healthcare or long-term care insurance. However, the legislation required that the governmental retirement plan make the premium payments directly to the insurance provider.
Unfortunately, the high administrative burden prevented many governmental retirement plans from implementing the direct payments to insurance providers, which prevented eligible public safety retirees from accessing this important benefit.1
What is new?
In December 2022, Congress passed legislation to enhance the HELPS Retirees Act that removed the requirement that premiums be paid directly by the governmental retirement plan. Now, all eligible public safety retirees can elect to exclude up to $3,000 from their taxable income from an eligible governmental retirement plan to pay qualified health or long-term care insurance premiums.
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Why is this important?
Since 2003, there have been significant legislative updates impacting retiree healthcare, including the Medicare Modernization Act, the Affordable Care Act, the American Rescue Plan Act, and the Inflation Reduction Act. The laws have created and strengthened health insurance markets for retirees by driving competition among insurers, eliminating barriers to coverage, enhancing benefits, and providing government subsidies to lower the cost of healthcare. As a result of finding better value on the individual market, there has been dramatic growth in enrollment in plans purchased directly by individuals as compared to group purchasing.4 Many public safety retirees are choosing to waive group health plan coverage from former employers because they can find better value by purchasing individual coverage. Now these public safety retirees can also take full advantage of the pre-tax distribution they earned as a public safety officer.
Via Benefits respects the sacrifices made by our public safety officers, which is why it advocated for the passage of the 2022 HELPS Retirees legislation by educating lawmakers of the administrative challenges to the law in its previous form and how to improve access to the benefit for public safety retirees.
About the author: Eric Stanger supports large, complex employers in evaluating and designing individual market solutions for retiree healthcare. Eric has over 20 years of human resource consulting and product management experience, having started in the industry with a focus on HR benchmarking, then transitioned to developing and managing health benefits solutions.
Prior to Via Benefits by WTW, Eric led the retiree health exchange at Conduent for seven years, responsible for client satisfaction, operations, sales, P&L and product development. More recently, Eric led business development for Aon's retiree health exchange, helping organizations understand and closely evaluate exchange solutions for their retirees.
Prior to his work with healthcare exchanges, Eric helped develop the first (he claims) health savings account in the industry at Mellon HR Solutions. He designed and managed the HSA product for Mellon before moving to Fidelity Investments to implement and manage the Fidelity HSA product.
Endnotes:
1. spanberger.house.gov/posts/president-signs-into-law-spanbergers-bipartisan-legislation-to-protect-tax-credits-of-retired-police-officers-firefighters and ncpers.org/blog_home.asp?display=193
2. nerdwallet.com/article/taxes/federal-income-tax-brackets
3. irs.gov/pub/irs-dft/p575--dft.pdf
4. kff.org/policy-watch/as-aca-marketplace-enrollment-reaches-record-high-fewer-are-buying-individual-market-coverage-elsewhere and cms.gov/newsroom/press-releases/nearly-16-million-people-have-signed-up-affordable-health-coverage-aca-marketplaces-start-open
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