A law named after a Culpeper resident will ensure parity for all retired police officers and firefighters and provide access to a tax benefit to help cover health insurance premiums.
Wally Bunker, a retired police lieutenant was unable to access pre-tax health and long-term care insurance benefits due to restrictions in the original Healthcare Enhancement for Local Public Safety Retirees Act. The law signed by President Joe Biden will make retirees like Bunker able to take advantage of the benefit with new guidelines.
This provision is based on the Wally Bunker HELPS Retirees Improvement Act. U.S. Congresswoman Abigail Spanberger (D-VA-07) and U.S. Representative Steve Chabot (R-OH-01) introduced the bipartisan legislation in March 2022.
Bunker, a 74-year-old retired police officer living in Culpeper, was a police lieutenant for the Suffolk Police Department for nearly 22 years where he served in patrol, investigations, internal affairs, communications and undercover cases. Since his retirement and the passage of the original HELPS Retirees Act, Bunker has been unable to access the pre-tax benefit for health and long-term insurance due to a direct payment requirement. The City of Suffolk uses a third-party company for retirement distributions to insurance providers meaning he was excluded from the benefit.
“I cannot express how much I appreciate Rep. Spanberger’s efforts to garner bipartisan support and introduce legislation in the House that proved to be the catalyst to prod the Senate to introduce similar bipartisan legislation that rights an unfair practice,” said Bunker. “Rep. Spanberger and her wonderful staff quickly realized this was neither a Seventh District nor a Virginia issue but affected tens of thousands retired public safety personnel nationwide.”
Public safety officers often retire earlier than Americans in other occupations because of the physical demands and unique job hazards they face on the job. Unfortunately, when they retire early, many lose access to their employer-sponsored health coverage but are still years away from Medicare eligibility.
To prevent high out-of-pocket health insurance costs, Congress included in the HELPS Retirees Act a provision that allows retired public safety officers to withdraw $3,000 tax-free from their pension plan annually to pay health or long-term care insurance premiums. However, the 2006 law required that pension plans pay the $3,000 directly to the insurer – but many smaller pension plans, including the one used by the City of Suffolk, use a third-party system for disbursing payments, therefore preventing many retirees like Bunker from accessing the benefit.
The new legislation removes the requirement that pension fund distributions must go directly to the insurer to be eligible for tax-free status – and it makes sure that retired first responders can access a critical tax benefit to help cover health and long-term insurance.
“Virginia’s law enforcement officers and fire fighters routinely operate under immense pressures. The intense, day-to-day physical and psychological demands of the job push many of these public servants to retire early – often at a moment in their lives when they can neither access employer-sponsored healthcare coverage nor enroll in Medicare,” said Spanberger. “I’ve been proud to lead the charge to resolve this issue, and I want to thank Virginia Seventh District resident Wally Bunker for his advocacy on behalf of thousands of retired public servants like him. With this legislation now law, we are making sure that retired officers and fire fighters can cover their health insurance costs, no matter how their pension payment is disbursed.”
The Wally Bunker HELPS Retirees Improvement Act will:
- Ensure that payments for health insurance premiums, whether through the pension system or a third-party system, are tax deductible
- Allow stipends to qualify for the income exclusion under IRS section 402(I)
- Help alleviate the burden imposed on public pension plans of having to interact and coordinate with numerous insurance companies on behalf of the related public safety retiree
The Wally Bunker HELPS Retirees Improvement Act is endorsed by the National Fraternal Order of Police, International Association of Fire Fighters, and National Association of Police Organizations.
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Crystal Graham
