SJC: Retiree health insurance rates not subject to bargaining

SJC: Retiree health insurance rates not subject to bargaining
February 12, 2015

In a precedent-setting case, the Supreme Judicial Court on Feb. 3 upheld the authority of municipalities to change health insurance contribution rates for retirees without going through collective bargaining.

The SJC concluded that the city of Somerville did not violate employee collective bargaining rights when it changed contribution rates for employees who had already retired.

Somerville accepted Chapter 32B, Section 9E, in 1979, allowing the city to pay more than 50 percent of health insurance premiums for retired employees. Until 2009, the city paid 99 percent of the premium for retirees on its indemnity plan and between 80 percent and 90 percent for retirees on HMO plans.

In 2009, the city decreased its contribution to 60 percent for the indemnity plan and 75 percent for HMO plans. The city did this unilaterally under the premise that retirees do not have collective bargaining rights under Chapter 150E.

The city’s public employee unions claimed that this was a change in a future benefit for active employees and therefore needed to be bargained. They took the case to the Commonwealth Employment Relations Board, which sided with the unions in October 2011.

On appeal, the SJC reversed the CERB decision, concluding that in fact the city was under no obligation to bargain with active employees over retiree benefits. The court agreed with the city that, under Chapter 32B, contribution rates for retired employees are determined solely by the local government.

The SJC concluded that the Legislature intended decisions about retiree health benefits to be solely at the discretion of the municipality.
Written by MMA Legislative Analyst Katie S. McCue