Disability Retirees: Different Rules Apply for NJ Public Sector Mandated Health Contributions

In a published decision released on June 21, 2016, the New Jersey Superior Court Appellate Division held that New Jersey's Chapter 78 health contributions imposed on public employees since 2011 DO NOT apply to disability retirees (as opposed to New Jersey public employees who retired based on years of service).

The case, which involved Brick Township and its PBA, established that the Legislature did not intend for New Jersey public employees who retired due to disability to have to contribute towards their health care coverage through their retirement. The statute is silent on the subject of disability retirement contribution obligations, which has led to uncertainty about the Legislature's intent.

Chapter 78 is best known for the four-year phase in that started in 2011 which was intended to make public workers contribute towards their health care at levels that approximate the private sector. For many public workers, by the fourth year of the phase in, they have contributed amounts that may exceed what comparably paid private workers are required to pay for their insurance.

The result of the Brick decision will be most immediately felt by local jurisdictions that may have done what Brick did - require disability retirants to contribute at Chapter 78 levels towards their health coverage in retirement. These public employers would be wise to address these situations head on rather than to wait for litigation to ensue, even if it means reimbursing disability retirees for years of contributions.