The Pension Protection Act of 2006 allows certain retired and disabled public safety officers to reduce taxable income by up to $3,000 annually to pay qualified insurance premiums.
Until recently, the only way to qualify for the exclusion was to have premiums withheld from a retirement plan (such as an MSRS pension plan ) and paid directly to the insurance provider. With the signing of the SECURE Act 2.0 by President Biden, eligible retired public safety officers are no longer required to set up direct payment of insurance premiums through retirement plan providers. However, upon request, MSRS will continue to withhold premiums for eligible retired and disabled public safety officers who are under age 65 and who elect to receive health and dental insurance coverage through SEGIP.
Premiums for a spouse and dependent children are eligible for the tax exclusion; however, survivors do not maintain eligibility for this provision after the death of an eligible public safety officer or judge.
For more information about this program, contact MSRS at 651-296-2761 or 1-800-657-5757.
If you participate in the Health Care Savings Plan (HCSP) or another similar program that allows reimbursement of insurance premiums, you cannot receive tax-preferred treatment of the same expenses from both programs.
You may use your HCSP for reimbursement of other eligible health care expenses including co-pays, deductibles and insurance premiums not deducted from your pension benefit. You may also request reimbursement of your insurance premiums that exceed the $3,000 tax exclusion maximum.