State-Subsidized Health Insurance for State Retirees (from Bob Lyons, TRS Trustee)

…Illinois’ high court has agreed to hear a direct appeal of lawsuits challenging the state’s right to charge retirees premiums for their state-subsidized health insurance. In a brief order issued Thursday, the court said it would hear the appeal of all four lawsuits filed trying to block the insurance premiums from taking effect. By accepting the direct appeal, the cases will skip the appellate court and result in a quicker resolution of the issue. No schedule for the court to hear arguments in the case has been set.

Last month, Sangamon County Judge Steven Nardulli ruled that state-subsidized health insurance for a retiree is not a pension benefit protected by the Illinois Constitution. He dismissed the four suits that were filed seeking to stop the state from imposing insurance premiums on retirees.

Springfield attorneys Don Craven and John Myers, who filed one of the lawsuits, appealed the decision to the 4th District Appellate Court. However, they also filed a request to the Supreme Court to hear the appeal directly. Attorneys for the state agreed, saying a Supreme Court ruling will expedite the decision.

Last year, the General Assembly approved a bill allowing the state to impose premiums on retirees for their state-subsidized health insurance. State workers who retire with 20 or more years of service are entitled to premium-free state health insurance, although they do pay for dependent coverage and some out-of-pocket expenses.

When the bill was debated, state officials said Illinois was spending $880 million a year on retiree health insurance and the costs were increasing. They said 90 percent of retirees were paying no premiums for their state health insurance.

Since the bill was approved, the state has not imposed the premiums. They were the subject of contract negotiations between the state and the American Federation of State, County and Municipal Employees. AFSCME said it negotiated much smaller premiums than Gov. Pat Quinn’s administration initially wanted to impose. The administration said it wants to begin the premiums July 1.

FYI: this case does NOT directly affect TRIP participants. However, it is worth following to see how the court rules on constitutional and contractual language... also that the Illinois Supreme Court was willing to hear the case, and the Appellate level was thus skipped.

—Bob Lyons

Read also Consideration, Senate Bill 1313 and Senate Bill 0001