An Illinois Appellate Court recently issued an opinion regarding the Public Safety Employment Benefits Act (PSEBA). In McCaffey v. Village of Hoffman Estates, the Appellate Court ruled that the Village was not obligated to pay insurance premiums for beneficiaries who had become eligible for Medicare coverage.
One of the plaintiffs, a former police officer, was injured in the line of duty and applied for PSEBA health insurance benefits for his family and himself. Those benefits were granted by the Village in 2006. Some time around 2015, the former officer and his wife became eligible for Medicare based on disability. The Village notified plaintiffs that it would stop paying insurance benefits and sought recovery of health insurance premiums paid from 2015 to 2018. The Village also stopped providing insurance to plaintiffs in 2018, asserting that their eligibility for Medicare coverage relieved the Village from paying any further PSEBA benefits.
Plaintiffs sued, claiming that their eligibility for Medicare coverage did not relieve the Village from paying for their health insurance premiums through PSEBA. The trial court granted the Village’s motion to dismiss the plaintiffs’ complaint, finding that the Village was no longer obligated to pay PSEBA benefits once the plaintiffs became eligible for Medicare. Plaintiffs appealed.
On appeal, the Appellate Court first noted that the PSEBA statute provides that the Village’s obligation to provide PSEBA benefits is reduced or eliminated by health insurance benefits payable from another source. The Court noted that a previous court ruling had already interpreted that provision to apply to Medicare eligibility. The Court then rejected plaintiffs’ argument that the former officer had “current employment status” with the Village such that his Medicare benefits would only be considered a secondary payer and not a replacement for PSEBA benefits.
Finally, the Court addressed plaintiffs’ claim that PSEBA benefits should not have been completely eliminated, and instead the Village should have been responsible for the difference in coverage between Medicare and the coverage provided by the Village through PSEBA. The Court noted that the PSEBA statute is not clear on whether a municipality is responsible for the difference in coverage, raising a number of unanswered questions for municipalities in interpreting and applying the statute when other coverage is available. The Court noted that a clarification of this issue would be better addressed by the legislature, not the courts, and concluded that where a recipient is eligible for Medicare coverage, it will “reduce” the Village’s obligation to provide PSEBA benefits to zero.