To amend the Internal Revenue Code of 1986 to allow Federal civilian and military retirees to pay health insurance premiums on a pretax basis and to allow a deduction for TRICARE supplemental premiums.

This bill would allow retired federal civilian employees and military veterans to pay their health insurance premiums using pre-tax dollars. Currently, active-duty federal employees can pay these premiums before taxes are withheld, but retirees must pay them using after-tax income; this legislation would extend that same tax advantage to retirees enrolled in the Federal Employees Health Benefits Program (FEHBP) and TRICARE.

For the individual retiree, this change would lower their taxable income, effectively reducing their annual tax bill and increasing their take-home retirement pay. Additionally, the bill creates a specific tax deduction for TRICARE supplemental premiums and enrollment fees that would be available to all eligible veterans, regardless of whether they choose to itemize their deductions.