Unfortunately, I cannot give you an answer that you can put in a file and use as support. Just Answer does not work that way. Here is an excerpt from the code section documentation that touches on the topic. The entire document is over 200 pages. This is beyond the scope of Just Answer. At this point, if you want more certainty you should take this info to a CPA and engage them to do the research. I have come across this before and would take this position on a tax return. That just isn't going to be enough for what you are looking for. I hope this gets you pointed in the right direction.
TREATMENT OF CERTAIN DISABILITY BENEFITS RECEIVED BY FORMER POLICE OFFICERS OR FIREFIGHTERS.
Sec. 1529 of Pub. L. 105-34, as amended by Pub. L. 105-206, provided the following rule:
(a) General Rule.--Amounts to which this section applies which are received by an individual (or the survivors of the individual) as a result of hypertension or heart disease of the individual shall be excludable from gross income under section 104(a)(1) of the Internal Revenue Code of 1986.
(b) Amounts To Which Section Applies.--This section shall apply to any amount--
(1) which is payable--
(A) to an individual (or to the survivors of an individual) who was a full-time employee of any police department or fire department which is organized and operated by a State, by any political subdivision thereof, or by any agency or instrumentality of a State or political subdivision thereof, and
(i) a State law (as amended on May 19, 1992) which irrebuttably presumed that heart disease and hypertension are work-related illnesses but only for employees hired before July 1, 1992, or
(ii) any other statute, ordinance, labor agreement, or similar provision as a disability pension payment or in the nature of a disability pension payment attributable to employment as a police officer or fireman, but only if the individual is referred to in the State law described in clause (i); and
(2) which was received in calendar year 1989, 1990, or 1991.
(c) Waiver of Statute of Limitations.--If, on the date of the enactment of this Act (or at any time within the 1-year period beginning on such date of enactment), credit or refund of any overpayment of tax resulting from the provisions of this section is barred by any law or rule of law (including res judicata), then credit or refund of such overpayment shall, nevertheless, be allowed or made if claim therefore is filed before the date 1 year after such date of enactment.