First, you must have taxable income from a pension. No, the pension administrator no longer has to pay the premiums, but the $3,000 exclusion is counted against taxable pension income only.
So when you enter the 1099-R to add the pension income to your return, in the screens right after you enter the 1099-R data, there will be a screen that asks if you had been a public safety officer. You answer YES and then you will be asked how much did you pay towards the insurance premium (max of $3k).
This exclusion will appear in the difference between line 5a and 5b. In addition, the letters PSO will appear on line 5a.
If you do not have any taxable pension income, then you cannot get the $3k health insurance premium deduction for public safety officers.
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