Bill Overview
Title: Police and Fire Health Care Protection Act of 2022
Description: This bill eliminates the requirement that payments be made directly to providers of accident or health plans or qualified long-term care insurance contracts as a condition of eligibility for the tax exclusion of distributions from tax-exempt retirement plans for such health and long-term care insurance.
Sponsors: Sen. Brown, Sherrod [D-OH]
Target Audience
Population: People employed as police officers and firefighters
Estimated Size: 1700000
- The bill pertains to health insurance payments related to police and firefighters, indicating that it primarily impacts individuals who have been employed in these professions.
- People that have served or are serving in these roles are likely to be utilizing or planning for their post-retirement benefits, particularly concerning health care.
- The legislation will likely alter how retirees in these professions manage tax implications of their health care payments.
- The number of retired law enforcement officers and firefighters in the United States is relevant as they are directly affected.
- Globally, the bill primarily affects individuals retiring from similar professions in jurisdictions with comparable retirement and tax systems, though its direct legal impact is limited to the US.
Reasoning
- The target population is clearly defined as police officers and firefighters, both active and retired, who are managing health and long-term care insurance payments.
- It's important to consider how the bill affects people's financial management, especially focusing on tax implications and retirement planning.
- While the targeted group is significant, the implementation may not impact everyone equally, as some might choose to engage with these benefits differently.
- Assessments would need to consider current retirement plans, how individuals focus on distribution of benefits, and potential reactions to tax changes.
- Budget constraints under $90 million in year 1 indicate that while a notable change for some, the immediate budget scope is limited compared to the long-term horizon, potentially affecting the rollout.
- The large budget increase by year 10 implies a growing or more widely distributed impact among retirees over time.
- Strategically, individuals with fiscal responsibilities or planning for significant health considerations post-retirement would keenly evaluate this bill's effects.
Simulated Interviews
retired police officer (Chicago, IL)
Age: 62 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- I've planned my finances around my existing retirement plan, so any changes to health care distribution profoundly impact me.
- In the first year, I'll monitor my expenses to understand tax savings.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 9 | 4 |
| Year 20 | 8 | 4 |
active firefighter (Phoenix, AZ)
Age: 58 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- I see potential in this policy to better align my retirement health expenses with tax benefits, assisting with college fees for my kids.
- Anticipating substantial savings if the tax exclusions work as intended.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
police officer (Los Angeles, CA)
Age: 45 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 2.0 years
Commonness: 8/20
Statement of Opinion:
- Though I am mid-career, understanding these benefits now could significantly enhance future planning.
- I appreciate any increased flexibility in health care fund use, possibly offsetting other costs.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 6 |
retired firefighter (Denver, CO)
Age: 72 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 15.0 years
Commonness: 4/20
Statement of Opinion:
- Extra focus on tax relief is helpful as medical expenses fluctuate; I see this as a way to ensure better cash flow each month.
- Given health issues, every bit helps, but sustained benefits over the years would be crucial.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 8 | 4 |
| Year 20 | 7 | 4 |
retired police detective (Miami, FL)
Age: 65 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 4/20
Statement of Opinion:
- Lowering my taxable income from health benefits allows us more comfortability and aligns with what I teach about smart post-retirement planning.
- Over time, as costs rise, immediate fiscal relief from taxes could enable leisure spending.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 7 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 6 |
firefighter (Houston, TX)
Age: 54 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 4.0 years
Commonness: 7/20
Statement of Opinion:
- Good retirement planning is about knowing your resources; policy changes in this area give me flexibility regarding my future choices.
- I see a prudent way to adjust my tax strategy.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
retired police officer (New York, NY)
Age: 63 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 6/20
Statement of Opinion:
- Improving tax management on health payments offers reassurance amid expensive medical treatments.
- We're hopeful that the budget coverage aligns with our needs as retirees.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 8 | 4 |
firefighter (Washington, DC)
Age: 39 | Gender: other
Wellbeing Before Policy: 8
Duration of Impact: 1.0 years
Commonness: 6/20
Statement of Opinion:
- A secondary benefit of tax management in retirement health planning is something I would support, gives room to plan ahead effectively.
- At this stage, such policies help inform future decisions more than anything immediately impactful.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 6 |
retired firefighter (Seattle, WA)
Age: 68 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 5/20
Statement of Opinion:
- With planned benefits distribution, any taxation relief improves satisfaction and allows small contribution as a volunteer coordinator.
- Considerable impact on community participation, where funding is often tight.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
retired police officer (Dallas, TX)
Age: 61 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 5/20
Statement of Opinion:
- For someone meticulous about balanced finances, enabling a shift in tax liability at retirement's start eases some volatility.
- I foresee a steady progression on wellbeing as I adapt to the changes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 7 | 5 |
Cost Estimates
Year 1: $90000000 (Low: $70000000, High: $120000000)
Year 2: $95000000 (Low: $75000000, High: $125000000)
Year 3: $100000000 (Low: $80000000, High: $130000000)
Year 5: $110000000 (Low: $90000000, High: $140000000)
Year 10: $130000000 (Low: $110000000, High: $160000000)
Year 100: $250000000 (Low: $200000000, High: $300000000)
Key Considerations
- The estimated number of currently retired and retiring police officers and firefighters.
- The potential uptake rate of the revised tax benefit.
- Changes in the population eligible for the tax exclusion over time due to generational retirements.
- Potential administrative challenges in implementing the change.