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Will Your Health Care Benefits Be There After You Retire?

 —   Aaron Nisenson, General Counsel, I.U.P.A. 

Retiree health care for law enforcement officers is endangered as never before.  Three forces have joined to create a perfect storm that threatens to drown retiree health care: rising health care costs; a political movement to deprive officers of pension and health care benefits; and the implementation of new accounting standards which will put the spotlight on retiree health care costs.  Local unions will have to fight this trend on many fronts: legal, political, and in the court of public opinion.  From a legal standpoint, one of the primary issues is determining what rights employees and retirees have to health care, and what local unions can do to impact any proposed changes.

Whether officers are entitled to health care after they retire depends in part on whether their right to health care has “vested.”  Many officers are familiar with the concept of vesting as it applies to their pensions.  Once a pension is “vested,” the pension cannot be taken away.  In many states the rules are similar for retiree health care, and once an employee’s right to retiree health care vests, the health care cannot be taken away.  Unfortunately, some states view health care as different from retirement, and do not apply the same vesting rules.  Therefore, officers should not assume that just because their pension has vested, that the health care benefits will get the same treatment. 

Another complication is that while employers are generally clear about the pension benefits for retirees, they are often unclear about the health care benefits for retirees.  However, the government may still be bound by commitments it makes, even those made informally.  For example, the Government Accounting Standards Board states that when calculating future health care payments for retirees, governments must consider not only any written health care plan, but also any “other communications” or even “an established pattern or practice with regard to the sharing of benefits or costs.” Thus, even oral statements or unwritten practices may establish health care rights for retirees.  However, this does not mean that retirees would be guaranteed these benefits, and state courts are all over the map on what exactly is needed to create a binding commitment to provide retiree health care.

The Unions right to bargain over health care benefits, and its right to enforce any agreement, is also complicated.  Since there are well over one hundred different local collective bargaining laws, and few national standards, the ability to bargain over health care varies greatly.  Some localities allow broad bargaining over health care benefits, some allow very little (and for those in the old south with no collective bargaining, as the Latin saying goes, fugitaboudit.)  Similarly, there is a wide range of law governing whether localities are required to provide health care benefits that have been included in collective bargaining agreements.  Thus, contract language that seems clear and binding may be enforceable in one locality and not in another.  On the other hand, even where there is no contract language addressing the issue, some unions may have the ability to prevent changes in retiree health care, for example by asserting a right to bargain over a change in a condition of employment.   

Given the varied landscape, a summary of all the issues involved in bargaining over retiree health care would fill a phone book.  However, two important and often overlooked issues bear attention.  First, in some localities, the government must continue to provide retirees the health care benefits based on the contract in place at the time they retired.  Therefore, even very old contracts can be vital when determining benefits.  Second, even if a union can’t directly bargain over health care benefits, it can often bargain over the “effects or implementation” of a change in benefits.  This can impact important areas such as the timing and method of co-payment, and can give the union significant leverage over health care changes.

Finally, even after it has been determined that retiree health care benefits have vested, the ultimate question remains: what exactly do I get, and will I get to keep it.  Unfortunately, even vested health care benefits may be changed within certain limits.  For example, one Court ruled that while retirees had a vested right to “free health care,” the employer could switch to an HMO because the basic benefit was still intact (it is probably safe to say that the judges did not use an HMO.)  For many officers, the debate about what exact level of health care was promised, and how much this health care can be changed, will be the key battleground.    

Local unions can play an important role in combating the threat to employee and retiree health care, whether or not they have collective bargaining rights.  To be most effective, locals should be pro-active and enter the battle fully informed on the legal and political landscape.

What unions can do:

 

·          Learn the law in your jurisdiction:  The I.U.P.A. has published a guide entitled Retiree Health Care – A Police Union Perspective Introduction to the New GASB Standards for Retiree Benefits, and we have extensive information on retiree health care and on the GASB requirements.

 

·          Learn the political and financial lay of the land:  Unions will have the most influence if they act before the government has formulated any plan to change benefits.  Therefore, keep attuned to any rumblings regarding changing health care benefits. 

 

·          Gather all information possible:  This includes all information that the government has put out on retiree health care benefits, and all possible collective bargaining agreements.  Having access to a person with inside knowledge of the health care system (such as a former personnel or administrative employee) is extremely valuable.

 

·          Request bargaining, or if not available political consultation, on health care issues that are important to the union as soon as any changes are foreseen.