More than 30,000 retired city employees will have to shell out as much as $4,440 more a year while waiting for the courts to decide whether Mayor Rahm Emanuel has the right to phase out the city’s 55 percent subsidy for retiree health care.
A federal appeals court recently denied the retirees’ request for an injunction blocking the increases from taking effect until the merits of the case are decided.
It was the latest of several rapid-fire defeats for the retirees. They initially filed their lawsuit in state court, only to be told it belonged in federal court, where a new lawsuit was filed that same day.
When U.S. District Judge James Holderman was asked for an accelerated decision, Holderman ruled “within an hour” that health care benefits were not meant to be protected by the 1970 Illinois Constitution, according to Clinton Krislov, an attorney for the retirees.
“That’s a view that no one else has voiced,” Krislov said.
The retirees’ class-action lawsuit argues that the Illinois Constitution guarantees that municipal pension membership benefits are an “enforceable contractual relationship which may not be diminished or impaired.”
The lawsuit further contends that retirees “have a property right to a lifetime health care plan” from the city “unreduced from the best terms” during their participation. Anything less would be a “depreciation of property rights” guaranteed by the 14th Amendment to the U.S. Constitution,” the lawsuit states.
Krislov said it’s “unfortunate” that retirees on fixed incomes will have to “bear the out-of-pocket expense” until the case wends its way through the courts.
But he said it’s “like the second inning of a game that has dragged on for 27 years.” An upcoming Illinois Supreme Court ruling in a case filed by state retirees whose health care benefits were cut could be pivotal, he said.
“If the Supreme Court were to declare health benefits are not protected across the board, that would obviously hurt us,” Krislov said.
“In the state case, retirees’ claims rest on an employment statute. They get the benefit because they’re former employees. The city case is different. We get it because we’re participants in one of four [pension funds]. Our claim is stronger because it explicitly comes through retirement system.”
Law Department spokesman Roderick Drew and Kelley Quinn, a spokeswoman for the city’s Office of Budget and Management, could not be reached for comment on the case.
Emanuel is counting on saving $23 million this year by forging ahead with a three-year phase-out of the 55 percent retiree health care subsidy. That would reduce the annual tab for retiree health care from a projected $108.7 million to $85 million.
Out-of-pocket increases will depend on when employees retired, whether they are Medicare-eligible, are married and have children.
But the increases will range from $37 more a month for the 7,018 non-married employees who are Medicare-eligible and retired between 1989 and 2005 to $370 more a month for the 95 non-Medicare families with children.
Increases that fall between those highs and lows include $151 more for 1,717 non-Medicare singles who retired after 2005 with 20 years of service, a $131 increase for a Medicare-eligible couple with kids that retired between 1989 and 2005 and a $353 hike for a non-Medicare family led by someone who retired after 2005 with 20 years of service.
One category of retirees will see their monthly premiums drop by $9. They are Medicare-eligible singles who retired with less than 10 years of service.