3/24/07: On March 6, 2007, Senator John Warner of Virginia introduced S. 773, legislation to allow federal civilian and military retirees to pay health insurance premiums on a pre-tax basis. The bill, known as the premium conversion bill, was introduced with bipartisan support and is pending in the Finance Committee. It is similar to legislation introduced earlier in the House of Representatives.
S. 773 would allow federal and military retirees to use pre-tax dollars to pay for their health insurance premiums. Active federal workers have been eligible for this treatment since October 2000 when the Office of Personnel Management ruled that federal employees can be eligible for pre-tax treatment. However, in order for federal and military retirees to be treated in the same vein, legislation is needed.
NTEU strongly supports this premium conversion bill which could save participants an average of $820 per year. During the past six years, cost of living adjustments have ranged from 1.3 to 3.5 percent, yet health care premiums have risen most years by double digit amounts. Since 2001, FEHBP premiums have risen by more than 50 percent.
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