Court Rules State Retirees Should Pay Health Premiums

Mar 5, 2019

State Health Plan website

A former North Carolina Supreme Court chief justice and other retired state government workers and teachers aren't exempted from paying health insurance premiums because they had a deal with the state to keep their benefits unchanged, an appeals court ruled Tuesday.

The state Court of Appeals said retirees don't have a contract preventing them from being forced to pay part of their health insurance costs under a law passed in 2011. A three-judge panel ruled unanimously that there is no contractual obligation limiting the State Health Plan covering more than 700,000 employees, retirees and their dependents.

"Retired state employees are promised nothing more than equal access to health care benefits on an equal basis with active state employees," Judge John Tyson wrote in the ruling for himself and Judges Wanda Bryant and Robert Hunter.

Retirees, including former Chief Justice I. Beverly Lake, sued in 2012 after the legislature directed the state employee health insurance plan to mandate that they make monthly contributions to receive what had been standard insurance coverage. The retirees claimed the state had agreed to a non-amendable contract that entitled them to premium-free health benefits for the rest of their lives under a health care plan in which the former workers paid 20 percent of their co-insurance.

Retirees still have access to premium-free options in a 70/30 plan and, if qualified, to a Medicare Advantage plan. Active state employees have no premium-free health care options, the judges said.

The appeals court reversed a 2017 decision by Gaston County Superior Court Judge Edwin Wilson that retirees had a contractual right to receive the standard coverage without a premium.

State Treasurer Dale Folwell, whose office includes the State Health Plan, estimated in 2017 that with more than 220,000 people covered by the lawsuit, Wilson's decision could cost state taxpayers more than $100 million, plus much more to cover the higher cost for retiree coverage in the future.