Court of Appeals’ decision raises questions on retirees’ health insurance premiums and perhaps coverage
May 16, 2022
In mid-February, the New York State Court of Appeals issued a decision with important collective bargaining implications for public employers in New York State, including school districts. The ruling in Donohue v. Cuomo [38 N.Y.3d 1 (2022)] stated that health insurance benefits for retirees – specifically premium contributions – may be subject to modification by a public employer after a collective bargaining agreement (CBA) expires, unless there is specific language expressly guaranteeing a lifetime benefit. As a result, public employers can expect union representatives to seek new language in CBAs to explicitly promise retirees lifetime access to health insurance coverage with premiums at a fixed contribution rate. Also, superintendents and other administrators are likely to ask for more explicit language on retiree health benefits in their contracts. The Court of Appeals emphasized the importance of exactitude in contract language.
This decision may result in the lengthening of the collective bargaining process and possibly litigation, as both employers and employee organizations attempt to reconcile the Donohue decision with typical contract language that simply promises health care coverage “during retirement” rather than “for life.”