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NARFE
LEGISLATIVE UPDATE |
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Legislation to allow federal and military retirees to pay their health insurance premiums with pre-tax compensation was introduced today by Rep. Tom Davis (R-VA), ranking member of the House Committee on Oversight and Government Reform (COGR) and 28 original bipartisan cosponsors, including Rep. Steny Hoyer (D-MD), COGR Chairman Henry Waxman (D-CA), Subcommittee on Federal Workforce Chairman Danny Davis (D-IL), Reps. Jon Porter (R-NV) and Chris Van Hollen (D-MD), the entire Washington, D.C. metropolitan area delegation and 19 members of the House Ways and Means Committee, which is the panel with jurisdiction over the bill.[1] The Davis bill (H.R. 1110) would amend the tax code to allow Federal civilian and military retirees - as well as active duty military employees - to pay their health insurance premiums on a pre-tax basis, as active federal civilian employees can already do. “On behalf of our nation’s 2.3 million federal annuitants, I am happy to give the National Active and Retired Federal Employees Association’s (NARFE) strongest endorsement to the bill introduced today by our good friend, Congressman Tom Davis, that would help retirees and survivors living on fixed incomes to bear the burden of high health insurance costs,” NARFE President Margaret Baptiste said. H.R. 1110 is supported by the Military Coalition -- a group of 35 military, veterans and uniformed services organizations -- and most organizations which represent federal and postal workers and annuitants. Under this legislation, the amount retirees pay for their share of health insurance premiums would be subtracted from the amount of their income reported to the Internal Revenue Service. The income tax paid by retirees would be lower because their taxable income would be lower. Federal and military retirees would not be required to take any further action under this legislation since their reported income would automatically result in lower income tax. Baptiste said that, “the reasons why this bill should become law are clear. Since 1998, we have had several years of double digit increases in Federal Employees Health Benefits Program (FEHBP) premiums, while cost-of-living adjustments (COLAs) for federal civilian and military retirees have increased by an average of just over 2 percent. In response, this ‘premium conversion’ benefit was granted to executive branch employees in October 2000 and to legislative branch workers in January 2001. While we’re glad that our colleagues who are still working receive this relief, we were disappointed that annuitants were left out since the tax code is unclear on whether we may participate. As a matter of equity, federal annuitants must receive this same relief.” “More than just retirees should care about this legislation,” said Baptiste, “Imagine the shock of a newly retired federal employee when she receives her first annuity check and learns that the federal government no long uses pre-tax compensation to pay her share of health insurance premiums,” Baptiste said. “That average annual tax savings of $820 she received when working ended when she retired from the government – just when it’s need the most.” “I pledge the full advocacy efforts of NARFE behind this legislation,” the NARFE President concluded. |
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