Illinois Court Orders Halt to State Deductions from Pensioners’ Benefits

On August 29, 2014, in response to a petition by the State Universities Annuitants Association (SUAA) and others, the Sangamon County Circuit Court ordered Illinois to stop future deductions from retiree’s pension checks for health insurance premiums, and required the State to be prepared to discuss and identify ways to return money that was previously taken from retirees’ monthly checks.

This order significantly reduces the impact of Public Act 97-695 (originally known as SB 1313). The law was passed by the Illinois legislature in an attempt to reduce the State’s overwhelming budget deficit. It gave the State broad unfettered power to require members of public pension systems to pay a portion of their health insurance premiums. This change in the law was a shock to pensioners because most of these individuals’ vested pension benefits included the State of Illinois paying the health insurance premiums for the retiree.

However, on July 3, 2014, the Illinois Supreme Court, in the case of Kanerva v. Weems, declared portions of the law unconstitutional. This in turn became the basis for the Circuit Court’s August 31st order. Thursday’s decision was the result of several groups that have filed constitutional challenges to the law soon after it was passed. The pensioners have argued that this law violates the Pension Clause of the Illinois Constitution because it diminishes and impairs pension benefits.

Previously the Circuit Court of Sangamon County dismissed the Kanerva case because it believed that health insurance was not a “pension benefit” and therefore not subject to the protections of the Constitution’s Pension Clause. The Supreme Court, on direct appeal, reversed that decision holding that the health insurance is protected by the Pension Clause because “eligibility for [it] … is limited to, conditioned on, and flows directly from membership in one of the State’s various public pension systems.”

The team at Maduff & Maduff has filed lawsuits challenging Illinois’ pension reform laws on behalf of members of Illinois State University Retirement System (SURS) to preserve benefits that were earned. Contact Maduff & Maduff for immediate help if you have questions about your Pension.