Lawmakers renew push for pre-tax health care for retirees

House lawmakers on Wednesday reintroduced legislation that would allow retired federal employees and military members to pay their monthly health care premiums with pre-tax dollars.

The bill, introduced by Reps. Chris Van Hollen, D-Md.; Frank Wolf, R-Va.; and Gerry Connolly, D-Va.; would let retirees subtract their health insurance premiums from the income they report to the Internal Revenue Service, resulting in a lower taxable income.

The legislation also would enable active-duty military personnel to apply a pre-tax rebate to supplemental insurance purchased to cover gaps in TRICARE, the Defense Department's health insurance program.

"By allowing federal retirees to pay for insurance with pre-tax dollars, we can help make health care more affordable and help retirees offset some of the rising insurance premiums," Wolf said.

Though a section of the Internal Revenue Code lets employees in the public and private sectors pay for health insurance with pre-tax dollars, it does not authorize employers to make this premium conversion benefit available to retirees.

Passage of the legislation would result in average savings of $820 annually for federal annuitants, according to government estimates.

Introduction of the measure drew praise from federal labor unions and other employee groups, many of which pointed to a 50 percent increase in premiums under the Federal Employees Health Benefits Program since 2001. "Federal retirees have watched their savings go down as their costs, particularly in health care, have risen by double digits," said Colleen Kelley, president of the National Treasury Employees Union.

"Introduction of the premium conversion bill is only one of many steps in a lengthy journey, but a very positive one nonetheless," said Margaret Baptiste, president of the National Active and Retired Federal Employees Association. "And because of the importance of this bill to federal civilian and military retirees, NARFE is determined to keep pushing until we reach the finish line -- enactment."