Wednesday, October 05, 2016

Reducing health insurance prescription co-pay benefits for an employer’s retirees to the same level as the employer’s active employees' prescription co-pay benefit


Reducing health insurance prescription co-pay benefits for an employer’s retirees to the same level as the employer’s active employees' prescription co-pay benefit
Altic v Board of Educ., 2016 NY Slip Op 06315, Appellate Division, Fourth Department

As relevant to this action, §14 of Part B of Chapter 504 of the Laws of 2009  amended Chapter 729 of the Laws of 1994 and made permanent temporary legislation prohibiting a school district, a BOCES, or a vocational education and extension board providing health insurance benefits and employer contributions on behalf  retirees and their dependents that were less than the health insurance benefits and employer contributions it provide on behalf a corresponding group of active employees.*

In this action there was no question that the prescription co-pay benefits for retirees and active employees were identical from June 30, 1994, the effective date of this so-called Moratorium Statute through June 30, 2007. Effective July 1, 2007, pursuant to a collective bargaining agreement [CBA], the prescription co-pay benefit for active employees was reduced. The prescription co-pay benefit for active employees was again reduced pursuant to the terms and conditions of a subsequent CBA, effective September 1, 2013. 

Accordingly, Onondaga-Cortland-Madison Board of Cooperative Educational Services [OCM] reduced its prescription co-pay benefits for its active employees’ as the result of collective bargaining effective September 1, 2013. OCM subsequently reduced its prescription co-pay benefits for its retirees to the same level it paid on behalf of the active employees' for the prescription co-pay benefit effective April 1, 2014.

Nancy Altic, on behalf of herself and other OCM retirees, filed an Article 78 petition challenging OCM’s reduction of its prescription co-payment benefits it made on behalf of its retirees. Supreme Court granted Altic’s petition and annulled OCM’s decision to reduce the OCM’s prescription co-pay benefit for its retired employees to the then same level of its prescription co-pay benefit it made on behalf of its active employees as set out in the collective bargaining agreement. Supreme Court held that OCM had violated certain provisions of Chapter 504 of the Laws of 200.

OCM appealed and the Appellate Division unanimously reversed the Supreme Court’s ruling “on the law” and dismissed Altic’s petition.

The Appellate Division explained that the Moratorium Statute, first enacted in 1994 "sets a minimum baseline or floor for retiree health insurance benefits.” That floor was measured by the health insurance benefits received by active employees.” In other words, said the court, the Moratorium Statute “does not permit an employer to whom the statute applies to provide retirees with lesser health insurance benefits than active employees."

In view of this, the Appellate Division concluded that, “inasmuch as there was a corresponding diminution of  [prescription co-pay] benefits . . . effected [with respect to retired employees] . . . from the present level  … on or after June 30, 1994” to the level of the prescription co-pay benefits being made on behalf of active OCM employees, OCM did not violate the Moratorium Statute.

* §14 of Part B of Chapter 504 of the Laws of 2009 amended §1 of Chapter 729 of the laws of 1994, making permanent temporary legislation addressing the health insurance benefits and contributions to be made on behalf of retired employees of school districts, BOCES and certain other educational entities, to read as follows: “Section 1. From on and after June 30, 1994 [until May 15, 2010,]a school district, board of cooperative educational services, vocational education and extension board or a school district as enumerated in section 1 of chapter 566 of the laws of 1967, as amended, shall be prohibited from diminishing the health insurance benefits provided to retirees and their dependents or the contributions such board or district makes for such health insurance coverage below the level of such benefits or contributions made on behalf of such retirees and their dependents by such district or board unless a corresponding diminution of benefits or contributions is effected from the present level during this period by such district or board from the corresponding group of active employees for such retirees.” 

The decision is posted on the Internet at:



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