[Congressional Record Volume 155, Number 42 (Tuesday, March 10, 2009)]
[Extensions of Remarks]
[Page E618]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 INTRODUCTION OF THE HEALTHCARE ENHANCEMENT FOR LOCAL PUBLIC SERVANTS 
                              ACT OF 2009

                                 ______
                                 

                          HON. JOHN M. McHUGH

                              of new york

                    in the house of representatives

                        Tuesday, March 10, 2009

  Mr. McHUGH. Madam Speaker, I rise today as a proud cosponsor of the 
Healthcare Enhancement for Local Public Servants Act of 2009, or HELPS 
II, Act. I appreciate the work my friend, Mr. Crowley, has done to 
develop this important legislation, which would make health care and 
Long Term Care (LTC) premiums more affordable for retired public 
servants.
  Currently, active American workers who participate in a cafeteria 
plan option known as ``premium conversion'' may elect to reduce their 
taxable wages by having their share of health insurance premiums paid 
on a pretax basis. Such an arrangement reduces both income and 
employment taxes. Since October 2000, this option has been available to 
federal employees who participate in the Federal Employees Health 
Benefits Program (FEHBP). This option is also available to private 
sector and state or local government employees with their employers' 
permission.
  Generally, premium conversion is not available to retirees. This is 
so because of an Internal Revenue Service (IRS) determination that 
distributions from qualified retirement plans are always subject to 
taxes, aside from several minor exceptions. Consequently, retirees are 
precluded from recasting pension payments as pretax income and thus 
denied this tax benefit.
  The Pension Protection Act of 2006 (P.L. 109-280) allows certain 
retired public safety officers to pay up to $3,000 of qualified health 
insurance and/or Long Term Care (LTC) insurance premiums from their 
pensions on a pretax basis. This tax advantage, which makes health care 
more affordable, has become increasingly important as health insurance 
premiums have increased in recent years.
  While I support making premium conversion available to all Americans, 
a good first step would be to make it available to retired state and 
local public employees through the enactment of the Healthcare 
Enhancement for Local Public Servants Act of 2009. Accordingly, I look 
forward to working with the Gentleman from New York to enact this 
measure.

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