St. Louis Loses Effort To Cut Retiree Health Insurance Benefits

Prior to 2006, retired police officers who served in the City of St. Louis, Missouri Police Department received health coverage without having to pay an insurance premium. In 2006, the Board altered the health insurance plan for retired officers. The new plan included a basic plan available without payment of a premium and a buy-up plan, which has a $251 monthly premium. The basic plan differed from the former plan by raising annual deductibles from $500 to $2,250, increasing co-payments for office and hospital visits, increasing the co-insurance maximum, and decreasing the co-insurance coverage percentage.

The buy-up plan offers retirees the same more extensive coverage as provided to active police officers. The difference between the buy-up plan and the plan for active officers is that, unlike retirees, active police officers do not have to pay premiums.

The St. Louis Police Officers’ Association filed a lawsuit against the City’s Board of Police Commissioners, alleging that the imposition of the new plan for retirees violated a state statute which provides that the Board “shall provide” health insurance to police retirees. The Missouri Supreme Court upheld the Association’s position, and ordered the City to offer to retirees the same plan provided to active employees, and at no charge to retirees.

The Court reasoned that “in determining the minimal extent of coverage required by the law, related statutes are relevant. The statute most clearly related to the retiree benefit law states that the Board ‘shall provide or contract for life insurance coverage and for insurance benefits providing health, medical and disability coverage for officers and employees of the Department.’ The Board fulfills its statutory obligations under this law by providing to active duty officers essentially the same coverage offered in the buy-up plan without the payment of a monthly premium.

“Although the law imposes upon the Board nearly the same requirement with respect to retirees, the Board now requires retirees to pay a substantial monthly premium to obtain the same benefit provided to active duty officers without the payment of a premium. The Board does so despite the fact that the retired officers invested their entire career in the Police Department in consideration for a promise of health care in retirement, only to have the Board change course after the officers retired. The promise of health care in retirement is a critical benefit given the enhanced risk of injury and disability inherent in policing. The difference in insurance benefits offered to active officers and retirees is not consistent with the nearly identical statutory language governing the Board’s treatment of its active officers and retirees. In order to avoid unreasonable discrepancies in insurance coverage provided to active duty officers and to retirees, the Board must provide its retirees with substantially the same level of reasonable benefits provided to active duty officers without the payment of a premium.”

St. Louis Police Officers’ Association v. Board of Police Commissioners of St. Louis, 2008 WL 2583028 (Mo. 2008).

NOTE: The Missouri Supreme Court was fractured in its opinions in the case. Three of the seven judges joined the “majority opinion,” while three others agreed that the City’s new plan violated the law but were unwilling to hold that the level of benefits necessarily should be those given active employees. A seventh judge, Stephen Limbaugh (Rush Limbaugh’s cousin and now a federal trial court judge) would have upheld the City’s position on the grounds that though the new retiree plan was “not the most generous of healthcare plans in terms of its deductibles, co-pays, and prescription drug benefits,” it was not a completely “illusory plan” and was “minimally acceptable.”

This article appears in the October 2008 issue