Healthcare Enhancement for Local Public Safety Officers (HELPS)
The IAFF won an unprecedented congressional victory with the passage of the Healthcare Enhancement for Local Public Safety Officers (HELPS) act. Under it, retirees can receive a tax-free distribution of up to $3,000 from retirement plans to help pay for health insurance or long-term care insurance premiums.
The IAFF encourages affiliates to remind retirees about the HELPS benefit.
Under the benefit, the IRS will allow retired fire fighters to exclude from income distributions made from eligible retirement plans up to $3,000 annually to pay the costs for accident or health insurance or long-term care insurance.
The funds can cover the retiree, spouse or dependents. The distribution must be made directly from the retirement plan to the insurance provider. Eligible retirement plans include a qualified trust, a section 403(a) plan, a section 403(b) annuity, or a section 457(b) plan.
Tax Instructions
The IRS requires retirees to report total distributions on Form 1040 or Form 1040-SR, line 5a. The taxable amount should be reported on Form 1040 or 1040-SR, line 5b. Also, retirees should write “PSO” (for public safety officer) next to the appropriate line where the taxable amount is reported. Please see the highlighted section on page 27 of the Form 1040 Instructions below. For tax accountants: refer to code section 402(l).
IRS 2023 Form 1040
IRS 2023 Form 1040 Instructions (see page 27)
IRS Current Version Publication 575 – Pension and Annuity Income
Frequently Asked Questions
What is HELPS?
HELPS is a new retiree health care benefit that provides a tax-free distribution of
up to $3,000 from retirement plans to help retirees pay for health insurance or
long-term care insurance. The funds can be for coverage for the retiree, spouse
or dependents. The distribution must be made directly from the retirement plan to
the insurance provider.
Why should I take the time to get this benefit?
A large number of retired fire fighters have to pay for their health insurance. As
an active employee, they were able to pay their premiums or health care costs
with pre-tax dollars. HELPS extends this pre-tax benefit into retirement (for up to
$3,000). It could be an annual tax savings of around $750.
Who is eligible for HELPS?
If you are a retired fire fighter, law enforcement officer, chaplain, or member of a
rescue squad or ambulance crew, you are eligible for HELPS.
Is my plan eligible for this?
Eligible retirement plans include qualified defined benefit pension plans, section
403(a) plans, section403(b) annuities and section 457(b) deferred compensation
plans.
How do I get started? What exactly happens with the money?
If you are a retired public safety officer, you can contact your retirement plan
administrator, who will set up a transfer to send the funds directly to the health
plan. You can use the sample 1040 form found at www.iaff.org/helps to report
this tax break. The IAFF advises members to consult with their retirement plan
administrator and accountant or tax preparer to ensure the proper execution and
reporting to the IRS of the HELPS benefit.
What if my retirement plan doesn’t want to participate in HELPS?
Retirement systems do not have to make any formal decision to participate or not
participate in HELPS. They do, however, have to agree to send payments
directly to your health insurance provider in order for you to take advantage of
the HELPS tax deduction. As long as you receive a statement from your
retirement plan stating how much money went directly to your health insurance
provider, you are eligible for the tax deduction.
Where can I find more information?
You can visit the National Conference on Public Employee Retirement
Systems website at www.ncpers.org, which provides further information on the
benefit.