OPM: Some Retirees Eligible for Tax Break

By: fedweek

Reversing an earlier policy statement, OPM has said that certain federal retirees are eligible to pay FEHB and FLTCIP premiums with pre-tax money under the 2006 Pension Protection Act. In general, while active employees may pay FEHB premiums with pre-tax-money—an arrangement known as “premium conversion”—retirees can’t. And even active employees can’t pay FLTCIP premiums with pre-tax money. However, OPM in benefits administration letter 07-201 June 20 stated that contrary to its earlier interpretation, federal retirees deemed to be retired “public safety officers” under the 2006 act are eligible, effective as of January 1, 2007, to pay up to $3,000 a year in health and long-term care insurance premiums with pre-tax money, so long as the distribution is made directly from the retirement system to the provider–as is commonly done with retiree FEHB and FLTCIP premiums. “Public safety officers” for this purpose include law enforcement officers and firefighters, under the law. Other retirees are not eligible, OPM stressed.