Members of the U.S. Supreme Court today ruled 5-4 in favor of a disability retirement benefits program set up by an agency that runs benefit plans for Kentucky public employees.

The agency, Kentucky Retirement Systems, pays only the normal retirement benefits for older workers who work past the usual retirement age and then become disabled, rather than the higher benefits paid to younger workers who become disabled. That design does not discriminate against workers who work past the usual retirement age, the court held in Kentucky Retirement Systems et al. vs. Equal Employment Opportunity Commission, No. 06-1037.

Congress itself has “approved of programs that calculate permanent disability benefits using a formula that expressly takes account of age,” Justice Stephen Breyer writes in the court’s opinion on behalf of himself, Chief Justice John Roberts Jr., and justices John Paul Stevens, David Souter and Clarence Thomas.

The Social Security Administration considers age when computing disability insurance benefits, and, until recently, the federal government included age in disability benefits calculations, Breyer writes.

In Kentucky, Breyer writes, “The whole purpose of the disability rules is, as Kentucky claims, to treat a disabled worker as though he had become disabled after, rather than before, he had become eligible for normal retirement benefits.”

Age comes into play only because the normal retirement rules take age into account, Breyer writes.

Kentucky Retirement Systems permits police officers, fire fighters and other workers in dangerous jobs to retire either after working for 20 years or after working for 5 years and then reaching age 55.

The plan also pays disability retirement benefits to some workers. It calculates normal retirement benefits based on actual years of service, and it calculates disability benefits by “adding to an employee’s actual years of service the number of years that the employee would have had to continue working to become eligible for normal retirement benefits, adding no more than the number of years the employee had previously worked,” according to the court’s summary of the decision.

Charles Lickteig, who continued working after becoming eligible for retirement at age 55, became disabled and retired at age 61. He filed an age discrimination complaint, arguing that the plan had failed to “impute additional years” solely because he became disabled after age 55.

Adding the extra years to the calculations would have increased Lickteig’s benefit payments.

The trial court ruled in favor of Kentucky, but the 6th U.S. Circuit Court of Appeals ruled in favor of Lickteig.

Justice Anthony Kennedy disagrees with the majority’s reasoning in a dissenting opinion signed by himself and by justices Antonin Scalia, Ruth Bader Ginsburg and Samuel Alito Jr.

The Kentucky system “compensates otherwise similarly situated individuals differently on the basis of age,” Kennedy writes.

A 45-year-old with 5 years of service in Kentucky who becomes disabled might receive $1,250 per month in benefits, while a 55-year-old with 5 years of service who becomes disabled might receive only $625, Kennedy writes.

“Age is the only factor that accounts for the disparate treatment,” Kennedy writes.

The court reached its decision because of concerns that a different ruling might lead Kentucky to eliminate the early retirement program or reduce disability benefits, but Kentucky should come up with another system that does not discriminate based on age, Kennedy writes.