Less taxing retirement

Last October, President Clinton took advantage of a provision in the federal tax code that allows employers to deduct health insurance premiums from employees' paychecks before taxes are calculated. He extended that tax advantage to federal employees, increasing many federal workers' take-home pay by hundreds of dollars per year. As the Office of Personnel Management prepared the regulations to make the change happen, then-OPM Director Janice Lachance said the "premium conversion" would be "one way to lessen the effects of rising medical costs on federal employees and their families." Clinton did not extend the tax advantage to federal retirees; doing so would require a change in the tax law. Several lawmakers introduced bills to convert retirees' health insurance premiums to pre-tax income, but their bills didn't pass during the 106th Congress. Now their bills are back. This week, Sen. John Warner, R-Va., introduced a bill (S. 1022) in the Senate and Rep. Tom Davis, R-Va., introduced an identical bill (H.R. 2125) in the House that would convert retirees' premiums. "This is a critical issue to many retirees, especially those living on a fixed income," Warner said on Tuesday. "Extending premium conversion will provide much needed relief from the increasing cost of health care insurance. It will help to ensure that more federal retirees are able to afford continued coverage under the Federal Employees Health Benefits program." The National Association of Retired Federal Employees has been pushing for a change in the tax law, but it would be the first time that the benefit has been extended to any retired workers. The House Ways and Means Committee and the Senate Finance Committee, which have jurisdiction over tax-related bills, will also have to consider the cost of the bills, which would extend premium conversion to both federal civilian retirees and military retirees covered by TRICARE. No Pains in the Neck In an April 10 letter, the Office of Personnel Management encouraged federal employees' health insurance carriers to cover alternative health care methods such as chiropractic, acupuncture and biofeedback services for pain management and other treatments. Rep. Bernard Sanders, I-Vt., has seconded OPM's effort. Last week he introduced bills (H.R. 2086 and H.R. 2087) to encourage Federal Employees Health Benefits Program carriers to cover services provided by acupuncturists, massage therapists, naturopathic physicians and chiropractors. The bills would allow employees to seek those services without getting a referral from a primary physician or other health practitioner.