Last week the 3rd District Appellate Court affirmed the practice of a number of municipalities who limit their PSEBA recipients to only their “basic,” or lowest level, health insurance plan.
In Esser v. City of Peoria, the plaintiff, a former police officer, had suffered a catastrophic injury as defined under the Public Safety Employee Benefits Act (“PSEBA”). He received a duty disability and applied for and was ultimately found eligible for benefits under PSEBA, which states in pertinent part, that an employer is required to pay the entire premium amount for “basic” health coverage for public safety employees who qualify under the Act.
The City had two health insurance plans from which employees could choose – a low deductible, and more expensive plan, and a high deductible, less costly plan. Previous to the plaintiff’s injury and a subsequent application for benefits under the Act, the City had approved an ordinance identifying its high deductible health insurance plan as its “basic” plan for purposes of the Act.
After the plaintiff was determined to be eligible for benefits pursuant to the Act, the City sent him a letter, notifying him that he was eligible for the high deductible plan at no cost per the Act, or he could choose the low deductible plan and pay the difference in premium between the two. He filed suit for declaratory judgment, asking the court to determine that he was eligible for the low deductible plan pursuant to the Act.
The appeals court held that the language of the act clearly states that the City’s (and any public employer’s) obligation is to pay the entire premium amount for “basic” health insurance, not the health insurance of the employee’s choice, or the most expensive health insurance, or any plan with more favorable coverage as might become available. Also, the City had previously identified the high deductible plan as being the “basic” plan for the City, and the one that was available at no cost to PSEBA recipients. Rules of statutory interpretation, the court concluded, required that the plain meaning of the language applied and that the plaintiff would be eligible for the designated high deductible plan identified by the City as its “basic” plan.
Public employers who have not yet passed ordinances identifying their “basic” health insurance plan for PSEBA recipients should consider doing so now, consistent with the decision in this case. Additionally, public employers should note that PSEBA recipients are not automatically eligible at no cost for the most expensive health insurance plan, or even the plan that they were on previously. In fact, it appears that the court in Esser has confirmed the practice of switching PSEBA recipients to an employer’s “basic” plan once the employee is determined to be eligible for benefits.