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Retiree health premium suit heads to court

Case may decide whether benefits can be changed

The battle over whether retired public employees should be required to pay health insurance premiums may finally be headed to a Springfield courtroom.

Four lawsuits that challenge the legality of such premiums are scheduled for a hearing Feb. 20 before Judge Steven Nardulli. All four have been consolidated into one case.

A central issue to all of the lawsuits is whether retiree health insurance has the same constitutional protections as a pension check.

The Illinois Constitution says, “Membership in any pension or retirement system of the state, any unit of local government or school district, or any agency or instrumentally thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished.”

Attorneys for the state argue the lawsuits should be dismissed because retiree health insurance benefits do not fall into the same category as a pension annuity.

“One of the fundamental legal issues is the scope of the application of the pension clause in the constitution,” said Don Craven, co-counsel on one of the lawsuits.

Protected benefit?

The General Assembly last year passed Senate Bill 1313, which called for retired state and university workers, judges and lawmakers to begin paying premiums for their health insurance. Downstate teachers have a separate health insurance plan for retirees, which does charge premiums.

State employees with 20 or more years on the job can retire and continue to be covered by state health insurance without paying premiums for it. Retirees must still pay deductibles and other out-of-pocket expenses.

State officials said last summer that 80,000 retirees had premium-free state health insurance. The benefit cost the state $800 million a year, they said.

The bill gave the Department of Central Management Services the power to set premiums for retiree insurance. CMS was instructed to consider things like the size of a person’s pension, their years of service, and their age at retirement in coming up with a schedule of premiums. Generally, those with large pensions would pay more.

All of the lawsuits argue that retiree health insurance is a protected pension benefit, just like a retirement check. The lawsuit filed by Craven and Springfield attorney John Myers also contends that workers who took advantage of the state’s early retirement incentive a decade ago are a special class because they relied on the promise of premium-free health insurance in deciding whether to retire early.

They also contend the law illegally delegates too much authority to CMS to determine premiums.

Never implemented

As for the premiums themselves, they’ve never been implemented.

The premiums are the subject of contract negotiations between the state and the American Federation of State, County and Municipal Employees that have dragged on for more than a year. The next bargaining session is scheduled for Feb. 6.

Neither CMS nor Gov. Pat Quinn’s office responded last week to questions about the premiums. The administration had been counting on saving money in the current budget by having the retiree health insurance premiums in place.

Craven and AFSCME said they have no indication the state is moving ahead with setting premiums at the moment. Moreover, Craven said, the state has assured Nardulli that if it decides to proceed with the premiums, it will notify the court in time to give lawyers opposing the premiums time to attempt to stop them.

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