US House Bill Allows Federal Retirees to Pay Health Bills Pre-Tax

May 18, 2005 ( - The US House of Representatives federal workforce subcommittee has okayed a bill that would permit federal workers to keep paying health insurance premiums on a pretax basis.

Sponsored by Representative Thomas Davis III (R-Virginia) and 33 other House members, the retiree health-care bill is now pending before the House Ways and Means Committee, according to a Washington Post report.

Subcommittee Chairman Jon Porter (R-Nevada) noted that federal premiums have gone up more than 9% a year since 1999 and said the Davis proposal would help ease such costs by giving back to retirees more than $400, on average, in tax savings per year.

Since 2000, federal employees have paid their health insurance premiums with pretax dollars through a program called premium conversion. The tax code, however, does not allow the tax deduction to be extended to retirees. The legislation also would permit active-duty military personnel to apply a pretax rebate when purchasing Tricare supplemental insurance, the Post report said.