Taxable Inclusion

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Retired Public Safety Officers Insurance Premium Deduction Program

The ERS is pleased to inform its Police and Fire Service retirees of a potential exclusion from taxable income based upon retiree medical contributions (health care premiums).  This specific ERS program is entitled, “Retired Public Safety Officers Insurance Premium Deduction Program.”


The Pension Protection Act of 2006 (PPA) allows certain ERS eligible Retired Public Safety Officers (an IRS defined term, as referenced below) to take a tax deduction of up to $3,000 on their federal income tax return for health and long-term care insurance premiums.  This law is also commonly referred to as the “HELPS” Act (Health Care Enhancement for Local Public Safety Officers).  The health or long-term care insurance can include coverage for an eligible participant’s spouse and dependents (but note, the deduction is available only to eligible participants). 


To take advantage of this deduction, the ERS must pay the premium to the eligible participant’s insurance provider directly from a participant’s retirement benefit.


The eligibility is determined by the Federal law.  “Public safety officer” is defined in 26 USC 402(l)(4)(C). At this time, only the following classes of ERS annuitants can participate in the program:

  •  Fire and Police Service Retirees
  •  Fire and Police Disability Retirees


Other retirement types, and survivors, are not eligible to participate in this program at this time.


More detailed information about the public safety officer tax exclusion and eligibility to participate can be obtained from the Internal Revenue Service’s (IRS) (


Under this program, effective January 1, 2014, the ERS will now allow additional insurance premium deductions to be taken for vision and dental insurance purposes directly from the pension payments for certain Fire and Police Service and Disability retirees.  Source1 is the third party administrator for the insurance carrier, MetLife.  To allow for these deductions, additional information can be obtained by clicking here.


This new vision and dental program is in addition to the City-offered Health and Dental Insurance plans.  Deductions that are taken for the City-offered plans can be combined with the premiums taken for Source1/MetLife to reach the $3,000 limit specified by the IRS.  All deductions will continue to be taken on a post-tax basis.  You will need to claim the exclusion on your 1040 to take advantage of the tax benefit.


Generally, if you are receiving a service retirement benefit for your own service, and retired as a “Protective Service Officer” as defined by the IRS, you can claim an exclusion from income for the actual retiree medical contributions (health care, vision, and dental premiums) paid from your pension payments up to a maximum amount of $3,000.  You can do so by putting the appropriate amount on line 16(b) of your 1040, and notating the code, “PSO” next to the amount.


Please note the ERS cannot provide tax advice, and your individual circumstances may vary.  You should contact your tax preparer for more details regarding this exclusion from income, and to determine if you qualify for it.