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Does My New Health Insurance Eliminate PSEBA Benefits? A Legal Update for First Responders.

Written by Brent Eames

August 18, 2021

firefighter work comp attorney

Recently, the First District Appellate Court issued a decision which could have a catastrophic impact on firefighters and police officers who suffer injuries in the line of duty. Illinois attorney for first responders, Brent Eames, has summarized the recent developments below. If you are a firefighter, EMT, or police officer who has suffered a work injury, please read below for more information regarding recent legal developments related to the Public Safety Employee Benefits Act.

The Public Safety Employee Benefits Act, (“PSEBA”) was enacted to provide employer-funded health insurance coverage to the families of first responders who were injured or killed in a line of duty. In particular, Section 10(a) of the PSEBA states that “an employer who employs a full-time law enforcement, correctional or correctional probation officer, or firefighter, who …. suffers a catastrophic injury or is killed in the line of duty shall pay the entire premium of the employer’s health insurance plan for the injured employee, the injured employee’s spouse, and for each dependent child of the injured employee.”  However, the statute also created an offset which is based upon an injured worker’s access to health insurance benefits elsewhere.  Specifically, the statute provides that health insurance benefits “payable from any other source” shall reduce the benefits the injured first responder receives under PSEBA.

Although PSEBA was enacted in 1997, it was not until 2012 that any Illinois courts attempted to provide a clear interpretation of what qualifies as  a benefit payable by another source under Section 10(a)(1) of the Act.  In 2012, the Fifth District Appellate Court attempted to resolve this ambiguity in the case of Pyle v. City of Granite City. 2012 IL App (5th) 110472. In Pyle, the plaintiff was a firefighter who sustained injuries to his shoulder and lower back when responding to emergencies which subsequently rendered him eligible for a line of duty disability pension, and PSEBA benefits. Nevertheless, the municipality that employed the firefighter refused to continue to pay his PSEBA benefits once the disabled firefighter became eligible for Medicare. After a lawsuit was filed, the Appellate Court concluded that Medicare benefits constitute “benefits payable by other sources” and once a PSEBA beneficiary attains the age of 65 and becomes eligible for Medicare benefits, the PSEBA health insurance coverage becomes supplemental and the employing municipality does not have to pay any more premiums per the statute. Thus, the Pyle Court essentially concluded that PSEBA health insurance benefits are not lifetime benefits, but only are payable until the injured first responder becomes Medicare eligible.

In the years following the Pyle case, municipalities across Illinois were left with many unanswered questions regarding when it is legal to terminate the PSEBA benefits of an injured police officer or firefighter due to insurance access which is allegedly “available” from another source.  Then, in the summer of 2021, the First District Appellate Court decided the case of McCaffrey v.Village of Hoffman Estates.   In McCaffrey, a police officer who was severely injured and subsequently disabled in the line of duty was granted a disability pension and PSEBA health insurance benefits.  These PSEBA benefits were payable to the officer, as well as his wife, and their dependent son.   At some later time, however, the officer’s wife and son became Medicare eligible as a result of a disability.  Given that they were receiving PSEBA benefits, the injured officer’s wife opted out of the Medicare coverage, along with her son, despite their eligibility. 

Even though the wife and son opted out of receiving Medicare benefits, and were not actually Medicare beneficiaries, the Village of Hoffman Estates stopped paying insurance premium benefits altogether.  The injured officer’s family members argued that eligibility alone did not relieve the Village of its obligation to pay their health insurance premiums, because mere access to other coverage (without taking advantage of it) was not sufficient to reduce plaintiffs’ health insurance benefits under PSEBA. The Village argued that notwithstanding the opt out, the family remained eligible for Medicare, and thus, Medicare qualified as health insurance payable from another source under PSEBA pursuant to the Pyle case. 

Unfortunately, the Appellate Court in McCaffrey ruled for the Village and against the disabled officer’s family.  The Court held that even though the family members opted out of receiving Medicare benefits, their eligibility alone was sufficient to trigger the offset provision under PSEBA, which means that the Village was relieved from its obligations to pay for the full premium of the health insurance policy.  The Court called upon the legislature to clarify the provision to confirm consistently across the board what “reduce” means in the context of reducing the Village’s obligations under PSEBA.  However, absent that future work by the legislature, the Court concluded that the legislature intended a recipient’s Medicare eligibility to reduce to zero a municipality’s obligation to provide health insurance benefits to that recipient.

Notwithstanding the Court’s ruling, the Court indicated that is “unclear” whether the legislature actually meant to make the term “reduce” analogous with the term “eliminate”.  Nevertheless, for now, before the legislature enacts any additional provisions clarifying Section 10(a)(1) of the PSEBA, it appears that first responders injured or killed in a line of duty are eligible for PSEBA only until they become eligible for Medicare or any other primary health insurance coverage. The question of whether eligibility for benefits under the private insurance plans of future employers, spouses, or other family members hinders the disabled employee’s PSEBA health insurance coverage still remains open.  However, given the Court’s detailed holding in McCaffrey, it is certainly anticipated that many municipalities will be anxious to test the waters with regard to how far they can push this provision to avoid paying benefits to injured police officers and firefighters.

Consult an Illinois Lawyer for Injured First Responders

If you were injured on duty and are wondering what steps to take, Eames Law Group can help.

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The content of this blog is intended for informational purposes only and does constitute or establish an attorney-client relationship, nor constitute legal advice. If you wish to discuss any further aspect of the material contained herein, please contact attorney for first responders, Brent Eames, at Eames Law Group, Ltd.

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