Health Insurance Stipend Counts Toward Pension For Public Employees

In Olsen v. Teachers Retirement Board (Oct. 9, 2007), the Brockton Education Association and the Brockton school committee agreed to increase the percentage of health insurance premiums paid by employees by five percent in exchange for a stipend paid to employees enrolled in health plans that was equivalent to the dollar amount of the increased premium payments. The parties also agreed to increase the stipend annually by the cost of living wage increases dictated by the contract. The contract language specifically states.

Beginning on July 1, 2004, the listed stipends will be increased by the amount of the general salary increase in that year and in future years. Eligible teachers who change plans, change level of coverage, or drop off of health insurance entirely after June 30, 2003 will continue to receive the stipend that corresponds to the plan and level of coverage that they had during 2002-2003. Eligible teachers who return from an approved leave of absence or who are recalled after a layoff will remain eligible for the stipend. Eligible teachers who resign and who later are rehired, however, will no longer be eligible for the stipend.

The Appeals Court agreed with the complaint brought by two teachers that these stipends qualified as “regular compensation” under the state law regulating public retirement pension systems, General Laws, Chapter 32B, §1. As a result, the stipends must be included in the formula that determines pension allowance for retirees.

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