On Monday, the U.S. Supreme Court heard oral arguments in a case that could have significant impacts on employee retiree medical insurance plans. In Stanley v. City of Sanford, a retired city employee alleges that Sanford’s limitations on benefits for disabled former employees violates the Americans with Disabilities Act. The Eleventh Circuit Court of Appeals concluded that the ADA does not extend protections against discrimination to former employees.

The plaintiff pointed to court decisions under Title VII that prohibit employers from discriminating or retaliating against former employees, arguing that the same reasoning applies to the ADA. She also claims that the Lily Ledbetter Fair Pay Act provides separate grounds for challenging the benefits changes, and clearly applies to actions taken after an employee has retired.

If the plaintiff prevails, employers offering retiree medical benefits could find themselves subject to discrimination claims when changes to those plans negatively impact persons with specific medical conditions, or disabled retirees in general. With the cost of retiree medical benefits skyrocketing, employers would face more difficulty in devising ways to control the costs of such programs. The Supreme Court is expected to render a decision on the appeal before the end of its current term in June.

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