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Benefits December 24, 2009
Cincinnati Retirees Go to Court Over Retiree Health Care
December 24, 2009 (PLANSPONSOR.com) – A new federal lawsuit claims that the city of Cincinnati violated the civil rights of its former employees by changing their retiree health care benefits.
Reported by Nevin E. Adams
The lawsuit, filed in U.S. District Court, seeks more than $1 million in damages and a court order blocking the city from altering medical benefits in any way. According to a report in the Cincinnati Enquirer the retiree-plaintiffs says that a court order is needed because the City Council made an “unlawful and unwarranted” reduction in their benefits that violated their due process and property rights under the U.S. Constitution.
“There are medical benefits being provided, but it’s not the kind of medical benefits they have been receiving,” said James McCarthy, the attorney for the retirees told the newspaper. “They are now facing some very serious medical decisions. They are very frightened about what the future holds.”
Council members made the change to benefits in November as a cost-cutting move and have defended the decision as a reasonable way to protect future benefits for all employees, also arguing that the new benefits – which offer a $100 deductible and limit out-of-pocket medical costs to $1,000 a year – remain more affordable and generous than benefit packages offered to most public and private sector employees, according to the report.
Prior Circumstances
Of course, prior to those changes most retirees paid little or nothing for health care. Under the new system, anyone who receives a city pension of $30,000 or less still would pay no annual deductible and would have out-of-pocket expenses capped at $500, according to the Enquirer. Those who receive more than $30,000 a year pay the $100 deductible with a $1,000 cap for in-network expenses, and a $200 deductible with a $2,000 cap for out-of-network expenses.
For their part the retirees say they were promised health benefits when they retired and it is unfair and illegal for the city to change those benefits now. “The representations they received were that this was going to be provided to them at no cost and that was going to continue throughout their retirement,” McCarthy said, according to the report. He said retirees made decisions about their retirement, their investments and their lives based on the belief the city would continue to provide the benefit.