State can't make retirees pay health care premiums, court rules

As a wider challenge to the state’s pension reform looms, the Illinois Supreme Court sided Thursday with retired state employees who claimed health insurance premiums are a protected retirement benefit.

Attorney General Lisa Madigan’s office was quick to say the arguments in the case decided Thursday don’t match the issues in the larger legal challenge facing the statewide pension overhaul approved last year.

“We will continue to vigorously defend the pension reform law,” Maura Possley, a Madigan spokeswoman, said.

But John Myers, an attorney who represents plaintiffs in both cases, said the attorney general’s office was “whistling past the graveyard.”

“A strong signal has been sent by the Supreme Court that is going to affect the outcome of that other case,” Myers said.

The court’s 6-to-1 ruling reverses a lower court decision allowing the state government to force retirees to pay for a portion of their own health care. The justices sent the case back to the lower court, where retirees can proceed with their challenge.

At issue is a law passed in 2012 that allows the state to collect premiums from retirees for their state-subsidized health care. Prior to that, state workers who retired with 20 or more years of service were entitled to premium-free health insurance. Under the new law, retirees had to cover part of the cost.

Writing for the majority, Justice Charles Freeman said the plain language of the constitution supports the conclusion that health insurance premium subsidies are part of a contractual relationship with retirees that can’t be diminished.

“Giving the language … its plain and ordinary meaning, all of these benefits, including subsidized health care, must be considered to be benefits of membership in a pension or retirement system of the State and, therefore, within that provision’s protections,” Freeman wrote.

A spokesman for House Speaker Michael Madigan declined to comment on Thursday’s ruling. But Senate President John J. Cullerton issued a statement saying the court “made it very clear that the Pension Clause means what it says.

“The Court cannot rewrite the Pension Clause to include restrictions and limitations that the drafters did not express and the citizens of Illinois did not approve,” Cullerton said. “The Clause was aimed at protecting the right of public employees and retirees to receive their promised benefits and insulate those benefits from diminishment or impairment by the General Assembly. If the Court’s decision is predictive, the challenge of reforming our pension systems will remain. As I have said from the beginning, I am committed to identifying solutions that adhere to the plain language of the constitution.”

Retirees filed several lawsuits after the 2012 law was passed. A Sangamon County judge dismissed the cases, saying health insurance benefits aren’t protected by the constitution. Retirees and the state then agreed to appeal directly to the Supreme Court.

Contributing: Associated Press