By TODD STACY and CAROLINE BECK, Alabama Daily News
MONTGOMERY, Ala. – A court hearing Monday could decide how and when teachers and other education workers receive refunds from the state’s retirement systems.
Montgomery Circuit Court Judge Johnny Hardwick is set to consider a motion from the Public Education Employees Health Insurance Plan asking for permission to immediately begin reimbursement payments to beneficiaries through their employers on what have been ruled improper fee increases from 2016 to 2018.
In May 2016, the PEEHIP Board voted to increase insurance premiums and spousal surcharges in order to keep up with rising costs. However, the Alabama Education Association (AEA) sued claiming irregularities with the Board’s vote were in violation of the state’s Open Meetings Act. Judge Hardwick agreed, and the fee increases were ruled invalid, a ruling that would be upheld by the Alabama Supreme Court.
AEA had proposed repayment to beneficiaries through a third party, claiming they did not trust PEEHIP to administer the payments and that too many burdens would be placed on local school administrators. However, in its motion to the court, PEEHIP says going through a third party vendor would be costly, burdensome, and needlessly delay payments to teachers and education workers.
The best and fastest way to get refunds to retirees is to allow PEEHIP to begin processing payments, they argued.
“The defendants respectfully request that the Court enter an order approving the proposal no later than July 8, 2019, so that there is sufficient time for the employers to process the refunds and pay them by July 31. 2019,” the PEEHIB board wrote in its latest court filing in the Remington,et al., v. Swindle case.
Because of IRS rules requiring employers to establish a contractural relationship with third party vendors – a laborious process for state entities – the payments to beneficiaries would be delayed.
“If a thirty party vendor were to attempt to handle the refund process for active PEEHIP members, as counsel for Plantiff have proposed, the length of time required to pay the refunds would be greatly extend and the burden on school systems would be increased,” the motion read.
In a statement to Alabama Daily News, AEA fired back saying they needed more proof that PEEHIP is capable of handling the reimbursements.
“AEA will not take any action to intentionally delay the distribution of refunds, but takes its obligation to ensure that everyone is treated fairly and compensated properly very seriously. We will not simply take PEEHIP’s word for anything and will demand the information necessary for us to do our due diligence in this matter.
“We hope that at the conference on Monday, that the court will require PEEHIP to provide the necessary information and documentation to AEA to verify that whatever procedure approved by the court will assure that all PEEHIP members will receive their accurate refunds.”
PEEHIP handles more than 350,000 retirement accounts and pays out approximately $3 billion in benefits each year.