Refunds are being distributed to state government retirees for health insurance premiums the Illinois Supreme Court said they do not have to pay.
The distributions are the final chapter in a story that began in 2012 when the General Assembly passed a bill to begin charging all retirees premiums for their state-subsidized health insurance as a way to control costs in the program.
“We’ve gotten calls from retirees saying thanks for the check,” said Springfield attorney Don Craven, who brought one of the multiple lawsuits filed challenging the law. “I think it’s over.”
The Department of Central Management Services said refunds are being distributed to more than 94,700 retirees. Spokeswoman Meredith Krantz said a “very small” number must still be distributed. Mostly those are refunds due to retirees who have since passed away. The money will instead be credited to their estates.
The refunds were issued either through direct deposit to a retiree’s account or by a check.
Craven said a little more than 200 retirees opted out of the class-action settlement, as was their right. He said if they still want to seek reimbursement, they likely will have to go through the state Court of Claims.
In 2012, the General Assembly passed a bill requiring all retirees to pay premiums for their state-subsidized health insurance. People who retired with less than 20 years on the job already paid premiums on a sliding scale based on their years with the state. However, those who retired with 20 or more years were not required to pay premiums, although they still had to pay for dependents and make out-of-pocket payments for health care.
The state began withholding premiums from retiree pension checks beginning July 1, 2013. Retirees had to pay 1 percent of their pension payment for health insurance. The withholdings mostly applied to members of the State Employees Retirement System, the State Universities Retirement System, the Judges Retirement System and the General Assembly Retirement System. Most downstate teachers are part of a separate insurance program when they retire, although a relative handful are part of the state’s regular retirement insurance plan.
Multiple lawsuits were filed challenging the law. The issue eventually made its way to the Illinois Supreme Court, which ruled in 2014 that retiree health insurance is a protected pension benefit and the state could not charge premiums to people who were previously exempt from them.
About $63 million was collected in premium money. Most of that will be returned, although lawyers in the multiple lawsuits will share about $1.5 million that Judge Steven Nardulli fixed as the amount to which they are entitled for their work.
That amounts to about 2.37 percent of the premiums collected from the retirees. A retiree who paid $100 in premiums while the cases were pending would thus see $2.37 deducted to pay the attorneys’ costs.
The amount approved by Nardulli was less than half the $3.1 million sought by the lawyers.
Krantz said that if any retirees believe they are entitled to a refund and do not receive one, they should contact their respective retirement system.
