NYSHIP Health Insurance Buyout Update

Tuesday, September 20, 2016

Some of our union brothers and sisters have had questions regarding the NYSHIP (New York State Health Insurance Plan) health insurance buyout payment they have received in years past.

Here’s what is going on…..

Our previous and current contract both have terms regarding compensation for LUT members who opt to not use the district provided NYSHIP Health Insurance benefit.  In our current contract, LUT members who have been in the family plan for at least three years, and who are covered by another health insurance policy, may give up district coverage entirely or change to individual coverage.

LUT members who make this choice are to be compensated a gross amount of $2,500.  This benefit for LUT Members was reached as a result of the collective bargaining that took place during contract negotiations with our school district.

Here’s the problem….

In May of 2012, the New State Department of Civil Service issued Policy Memorandum 122r3.  This memorandum prohibited state employees from receiving health insurance buyout payments for opting out of NYSHIP provided coverage, unless the employee received health insurance coverage on their own from someplace other than NYSHIP.

If employees had health insurance under a spouse whose coverage was also with NYSHIP, they could not receive a buyout payment.  According to the Department of Civil Service, Memorandum 122r3 was to be followed regardless of what may have been stipulated in contracts agreed upon through collective bargaining.  

In response to the Civil Service Memo, locals from Roslyn and Plainview-Old Bethpage commenced lawsuits, seeking a declaration that the new policies created as a result of Memorandum 122r3 were invalid.  NYSUT represented these locals in this litigation.

On June 9, 2016, the Appellate Division of the State of New York held that Policy Memorandum 122r3 is null and void.  In rendering this decision, the Appellate Division found that the Department of Civil Service failed to comply with mandatory constitutional and statutory rulemaking requirements and that it had acted in excess of its authority in enacting the memorandum.

So, what happens now?

The Appellate Division has denied the State’s motion for leave.  The State may now seek leave for New York’s highest court – The Court of Appeals.  The Court of Appeals has discretion of whether or not to hear the case.

While this matter remains in litigation, no NYSHIP buyout payments will be made for teachers who opt-out of the Levittown district NYSHIP health benefit, but are covered under a NYSHIP health insurance policy provided outside the Levittown district.

If the Court of Appeals strikes down the legality of Policy Memorandum 122r3 once and for all, or denies the State’s motion for leave, LUT members and/or bargaining unit-represented retirees will receive the compensation owed to them under the established terms of the current contract retroactive to January 1, 2016.

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