Following a recent court ruling, long-time state retirees will eventually see a more than $59 million refund that had been collected for health insurance premiums following a 2012 law.
Prior to the 2012 law, retired state and university employees, judges and General Assembly members, with at least 20 years of state service, received health care insurance from the state at no cost. However, state budget woes prompted the passage of legislation to rescind this free health coverage. The law allowed the state Dept. of Central Management Services (CMS) to deduct premiums from state retiree pension checks to pay part of their retiree insurance costs.
In response, retired state employees and their representatives took the issue to court, arguing that the change was a violation of their constitutionally-protected pension benefits. In July 2014, the Illinois Supreme Court sided with the plaintiffs, ruling the law was unconstitutional and confirming the health care benefits must be protected.
The pension systems have been deducting premiums from annuitants’ checks since July 13, 2013, though in light of the court ruling deductions will cease on October 1, 2014.
CMS confirmed that almost $33.4 million is owed to members of the State Employees Retirement System (SERS); premiums collected from SERS retirees has been held in an escrow account while the court case was pending, which will allow the state to eventually reimburse the money once court proceedings are concluded. Another $25.8 million is to be returned to four additional state retirement systems for the judiciary, legislators, some downstate teachers and university employees; CMS has confirmed that the state will make these refunds available when the final court judgment is delivered.
The reimbursement amount per retiree varies dramatically, and is dependent on the size of their pension.