SJC Decision Clarifies the Law Regarding a Retiree’s Entitlement to Group Health Insurance. The Retiree Had Resigned From Employment And Elected Not to Continue on the Group Plan Under the “Deferred Retirement” Rules But Chose Instead to Apply at the Time of Actual Retirement

In a decision issued on June 18, 2025 the Supreme Judicial Court has clarified a provision in the group health insurance law, G.L. chapter 32B. The relevant provision is G.L. c. 32B, § 9, which governs the group health insurance rights of retirees.

In Cannata v. Town of Mashpee, No. SJC-13637 (June 18, 2025), the court was asked to decide how section 9 applies to a retiree’s eligibility where the retiree had voluntarily left employment, did not continue on the group plan under the “deferred retirement” law, subsequently retired, and sought to enroll in the former employer’s group health plan.

Section 9, first paragraph, entitles an employee who retires while employed to continue on the plan provided that the employee pays the full premium.[1] At issue in Cannata was the third paragraph of §9. That paragraph allows an employee who voluntarily leaves employment and who defers retirement to continue on the group health plan by paying the full premium. In Cannata the employee had left his employment with the Town and had chosen not to continue on its plan. After retiring he sought to enroll but the former employer Town denied his application on the grounds that he was ineligible under its established unwritten practice where the retiree had not continued on the plan when leaving employment.

The retiree brought a lawsuit and the Superior Court dismissed his complaint for failure to state a claim because he had not alleged his compliance with the steps required to continue his coverage when he voluntarily resigned. After the retiree appealed to the Appeals Court, the SJC assumed jurisdiction of the appeal on its own initiative.

The court pointed out that the first paragraph of §9 requires that an employee on the group health plan at the time of retirement is entitled to remain on the plan by paying the applicable premium. The court held that this paragraph “imposes a requirement that the municipality’s group policy must be continued in retirement — not a requirement as to who is eligible for such coverage” [emphasis added]. It therefore ruled that a retiree who is not on the plan at the time of retirement “may be lawfully excluded under a reasonable municipal regulation, without running afoul of §9, first par.” [emphasis added].

Turning to the third paragraph of §9 covering deferral of retirement, the court observed that this paragraph “does not apply to Cannata because, at the time he sought to enroll in the town’s group health insurance plan, he had retired.” It held that the trial court’s dismissal therefore was error because Cannata’s failure to comply with the third paragraph’s steps are inapplicable to a retiree who applies for coverage at the time of retirement. The court decided that the retiree’s claim “depends entirely on the town’s regulations and policies”, noting that where the statute is silent “the issue is left to local discretion.”

The court then addressed what an applicant must allege in a complaint based on these circumstances. The court held that it is not enough for a retiree to allege the absence of a policy barring enrollment. It held, instead, that the complaint must allege “facts plausibly suggesting the existence of a policy permitting enrollment by a retiree following a deferred retirement during which the retiree was not enrolled” [emphasis in original]. Because the retiree had not made these allegations the court affirmed the dismissal, although it ordered that the retiree be given the opportunity to amend his complaint.

This case clarifies that §9 does not address the eligibility for group health insurance of a retiree who resigns before retirement and does not continue on the group health plan under the third paragraph. That, instead, is left to the rules and practices of the municipal employer. It should be noted that the allegations in Cannata indicated that the Town’s policy/practice was not “written”. Although the court did not explicitly address this factor, the better practice clearly is to establish the rules in writing. Among other advantages this gives all persons notice of the rules and also minimizes the sorts of conflicting reasons given for denial that were alleged in this case.[2]

We are pleased to provide advice to public employers regarding group health insurance and contributory retirement.

This update is provided for informational purposes only and should not be considered legal advice.

[1] Sections 9A and 9E are local acceptance laws that allow the employer to pay half or more than half the applicable premium, respectively. Nothing in the Cannata decision affects these provisions.

[2] In Cioch v. Treasurer of Ludlow, 449 Mass. 690 (2007), the court rejected a challenge to a municipal policy “first reduced to writing in 1999, [that] has the effect of denying enrollment to retirees who were not enrolled at the time of retirement.” As the court noted, these regulations must be “reasonable”. They also cannot conflict with the provisions in chapter 32B.