The Supreme Judicial Court has ruled that a municipality cannot require an employee to work for it a minimum number of years prior to retirement as a condition of that municipality contributing toward the cost of the employee’s retiree health insurance. As long as the employee is eligible for retirement benefits under c. 32, the employer must pay the same percentage of the premium cost that it pays for any other retiree. In Galenski v. Town of Erving, 471 Mass. 305 (2015), decided April 17, the Plaintiff was employed by the Town as a school principal for just the last six years of her 30-year career. She challenged a policy under which the Town only contributed toward the health insurance of those employees who worked the 10 prior years for the Town. She was allowed to participate in the retiree health insurance as long as she paid the entire premium.

employee benefit packageThe Galenski Court rejected the Town’s argument that the SJC’s 2007 decision in Cioch v. Town of Ludlow, 449 Mass. 690 (2007), allowed the eligibility limitation, noting that that the Ludlow regulation conditioned eligibility on the employee being enrolled in the Town health insurance program while an active employee and that was not prohibited by the plain language of sections 9 and 16 of c. 32B. The Court found the Erving policy was inconsistent with c. 32B in two significant ways. It established different premium contributions for different retirees in direct conflict with language under section 9E of c. 32B that mandates, “

[n]o governmental unit…shall provide different subsidiary or additional rates to any group or class within that unit.” And, the policy exempted the Town from contributing to any portion of the insurance premiums for one group of retirees even though the Town had adopted section 9E which obligated the Town to contribute more than 50 percent of the premium cost. The Town also argued that the policy was akin to calculating pension benefits based on years of service and was a reasonable cost containment effort because it should not be held responsible for paying a significant portion of an employee’s retiree health insurance when the employee had worked for other municipalities. The Court responded that the Legislature had addressed that potential inequity by enacting section 9A ½ , which sets forth a reimbursement process between multiple employing municipalities under which the last employer can recover its proportional share of contributions from the prior employers. The Court wrote that, if that cost containment provision is inadequate, that issue should be addressed to the Legislature.