After a lot of searching I figured this out! 

1.) Pull up the 1099-R Worksheet...

2.) Scroll all the way down to Rollovers, then. Inherited IRA, the to INSURANCE.

Look at the 3rd (last) option -

"Amount of qualified insurance premiums paid and subtracted from an eligible  public safety officer's distribution." report the health (up to $3000)

This reduced the taxable amount by the taxable amount in box 2a of the 1099R on  Form 1040 line 5b AND ADDS THE EXCLUSION CODE PSO ...next to line 5b as instructed by the IRS