Tuesday, May 15, 2018

TRIP Update May 15, 2018




Dear IRTA Members,
At a recent meeting of the TRIP Advisory Committee we were notified by the Department of Central Management Services (CMS), that the Comptroller had not made the State's payment to the Teachers Health Insurance Security fund since January 2017. The State's payment is approximately $10 million a month. Therefore, the State currently owes the fund approximately $170 million.
The fund is where all TRIP money is deposited. The fund has the following contributors: TRIP participants' premiums, Active teachers (percentage of payroll), School districts (percentage of payroll), State of Illinois (matches the active teachers' portion) and the federal government. Due to the lack of the State's payment insurance companies are not being paid on a timely basis as in the past. Therefore, if the insurance companies are not getting paid in a timely manner the doctors and hospitals are not receiving their payments in a timely manner either. CMS has told us some payments have been delayed as much as 200 days.
The IRTA's contract lobbyist and I met with the Comptroller's office recently to discuss the lack of payments to the fund. As we assumed, the Comptroller does not have enough revenue to make all required payments on a monthly basis. Therefore, she has decided to make the most necessary payments first and if money is available she will make payments to other needs.
In addition, I asked our law firm of Tabet, DiVito, and Rothstien to provide us an opinion on whether IRTA had standing to sue the Comptroller to compel her to make payments to the Teachers Health Insurance Security fund. In short, our law firm replied that the IRTA can bring a mandamus action to compel the Comptroller to pay TRIP payments.
A lawsuit would be a last resort. What we are asking you as TRIP participants is if you begin to experience your doctors or hospitals asking for payment up front for any procedure in lieu of them waiting for payment from the insurance company to notify the IRTA. At that time the IRTA Board of Directors will determine our course of action.
Sincerely,
James Bachman
IRTA Executive Director



Commentary:

from John Fitzgerald of Tabet, DiVito & Rothstein LLC:

Kanerva v. Weems: Health Insurance Benefits Are Protected!

•       This was a constitutional challenge to an amendment to the State Employees Group Insurance Act which reduced State contributions toward health insurance costs for retired public pension system members and their survivors.

•       The Court held that this amendment was unconstitutional.

•       The Pension Protection Clause protects more than the pension annuity.  It protects all “benefits” of membership in a pension system, including health insurance benefits.

•       If there is any doubt about the scope of a constitutional protection for pension rights, those doubts are resolved in favor of the pensioner.
                 
Kanerva and your health insurance benefits:

•       In Kanerva, the Supreme Court ruled that the Pension Protection Clause protects not only pension annuities but also “health insurance subsidies.”  (Kanerva, par. 49.)

•       In Kanerva, the Supreme Court invalidated amendments to the State Employees Group Insurance Act that “altered the State’s obligation to contribute toward the cost” of coverage by increasing retirees’ premiums and reducing the State’s contributions.  (Kanerva, par. 12-13.)  Importantly, the amendments challenged in Kanerva didn’t abolish a health insurance program.  They just made the benefits more expensive and pushed more costs onto retirees.




4 comments:

  1. From the Motion Filed August 21, 2014 in the Circuit Court for the Seventh Judicial Circuit in Sangamon County, Illinois:
    “…Under Kanerva, it is clear that the Illinois Constitution protects pension and retirement benefits from the diminishments and impairments that the Act imposes, and that the plaintiffs are entitled to their benefits without any diminishment or impairment from the respective State retirement systems. The very purpose of the Pension Protection Clause was to constitutionally guarantee the payment of pension and retirement benefits, to remove from the General Assembly the power to impair or diminish those pension benefits, and to eliminate the very argument that the defendants raise by their affirmative defense…”

    ReplyDelete
  2. from John Fitzgerald of Tabet, DiVito & Rothstein LLC:

    Future Challenges: Threats to Health Insurance Benefits:

    • The current governor, the previous governor and our legislative leaders have repeatedly taken aim at your health insurance benefits.
    • Our Supreme Court stopped similar efforts in Kanerva v. Weems.
    • This is where the fight to protect your pension rights will likely continue.

    The path forward:

    • For the reasons explained in Kanerva, we believe any attempt to take away your health insurance benefits will ultimately fail.
    • We are ready, willing and able to fight any further efforts through litigation if necessary.
    • “Crisis is not an excuse to abandon the rule of law. It is a summons to defend it. How we respond is the measure of our commitment to the principles of justice we are sworn to uphold.” (Heaton v. Quinn, par. 87.)
    • You should be proud of how your Association has responded and will continue to respond to the crisis.

    ReplyDelete
  3. From the IEA Retired, May 18:

    "Comptroller Mendoza reports $36.5 million transferred to TRIP/TRAIL. Illinois Comptroller Susana Mendoza clearly understands the importance of the TRIP/TRAIL health insurance program to the members of the IEA and told IEA President Kathi Griffin on Friday that $36.5 million was recently transferred to TRIP/TRAIL because she wanted to protect the retirement security of retired educators...

    "The issue of delayed state payments to TRIP/TRAIL has raised the concerns of some retired members. Despite the delay, IEA members participating in TRIP/TRAIL have not experienced any problems with their health insurance coverage..."

    ReplyDelete
  4. From Fred Klonsky’s Blog:

    Abdon Pallasch, Director of Communications, Illinois Comptroller’s office.

    Fred,

    We can agree on the cause of the delayed payments to the Teacher Health Insurance Security Fund and many other deserving funds around the state: Governor Rauner’s manufactured budget crisis. The most prominent voice exposing Governor Rauner’s attacks on worthy institutions around the state belongs to Comptroller Susana Mendoza.

    The state of Illinois continues to deal with a fiscal crisis that resulted from the lack of a complete budget for two years, during which the estimated backlog of bills had more than tripled by the end of FY 2017 and reached an all-time high of $16.7 billion later in the year. The passage of the fiscal year 2018 budget did not mean an immediate reversal of the damage that was done from the budget impasse.

    On a daily basis, the Office of the Comptroller continues to triage outstanding vouchers and transfers given limited resources in the state treasury. Throughout fiscal year 2018, despite facing substantial backlogs, we continue to make critical payments for pension contributions to the Teachers’ Retirement System and grant payments to K-12 schools, including funds through the Evidence-Based Funding formula. The office also paid the second quarter mandated categorical grants in April – several months earlier than the previous fiscal year. In addition to these payments, our office has been able to make $36.5 million in transfers to the Teacher Health Insurance Security Fund.

    Benefitting from additional receipts coming into the state treasury in the spring, and after seeing some stabilization in the state’s finances, the Office of the Comptroller provided $18.3 million to the Teacher Health Insurance Security Fund in March from the General Revenue Fund, and two additional monthly transfers, each at $9.1 million, were processed in April and May. It is our understanding that other deposits into the fund are made on an ongoing basis and that services to members have not been disrupted.

    The Office is working with limited state resources to address more than $2.1 billion in fund transfers that are still pending, while facing an estimated $7.3 billion bill backlog today. The decision to release these payments, and future payments, is solely dependent on the availability of state funds. It should be noted that the Office has even older transfer requests from fiscal year 2016 that we are working to address. The Office will continue to inform the Teachers’ Retirement System and Central Management Services on the ongoing condition of state finances and further provide the status of pending transfers.

    All required payments owed to the Teacher Health Insurance Security Fund will be paid. We are hopeful that the Legislature will insist, once again, that having a complete 12-month budget for fiscal year 2019 is essential for the state of Illinois. Once the Office reviews a final fiscal year 2019 budget, we will be better able to develop a path to make the payments owed by the state.

    Abdon Pallasch
    Dir. of Communications
    Office of the Comptroller

    https://preaprez.wordpress.com/2018/05/19/illinois-state-comptroller-susana-mendozas-office-responds-to-my-concerns-about-retired-teacher-health-payments/

    ReplyDelete