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EEOC Not Suing Employers That Offer Separate Pre-Medicare And Medicare-Eligible Retiree Health Benefits

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NU Online News Service, Aug. 24, 12:15 p.m. – The U.S. Equal Employment Opportunity Commission has withdrawn a requirement forbidding age discrimination in retiree health benefits.

Under the Clinton administration, the EEOC had suggested it might sue employers to stop them from offering one package of health benefits for employees who are old enough to enroll in Medicare and a second package for employees who are too young for Medicare.

EEOC officials said a federal court decision showed that offering a two-track retiree health benefits program violated the federal Age Discrimination in Employment Act.

But now the EEOC says it will rescind a section of its employee manual that describes the practice of offering a two-track program as age discrimination.

The rescission is effective immediately, the EEOC says.

“The Commission wishes to study further the relationship between certain employer practices regarding the provision of retiree health benefits and the Age Discrimination in Employment Act,” EEOC Chairwoman Cari Dominguez writes in a document announcing and explaining the rescission.

The EEOC has posted the document, Directive Number 915.003, on its Web site, at

EEOC originally said it would attack two-track retiree benefit plans after the 3rd U.S. Circuit Court of Appeals addressed the issue in August 2000, in a ruling on Erie County vs. Erie County Retirees Association. The ruling held that ADEA requires employers to offer equal health benefits, or equal expenditures on health benefits, to retirees of different ages.

Although EEOC has decided against using the Erie decision as the basis for a series of lawsuits, Dominguez emphasizes that employers must still offer equal health benefits, or equal expenditures on health benefits, to active employees over 65.

The EEOC is also studying the practice of changing benefits once retirees become eligible for Medicare in ways that reduce retirees’ total benefits packages.

“Though it is clear that ?Medicare carve-out’ plans that simply deduct from the benefits provided to Medicare eligible retirees those benefits that Medicare provides do not violate the ADEA, additional review is needed to assess other types of retiree health plan practices,” Dominguez writes.

The American Association of Health Plans, Washington, and the American Benefits Council, Washington, issued statements praising the EEOC move and saying it would help give employers the flexibility they need to continue offering retiree benefits.

But “the Erie County decision still remains troubling for all employers” who provide retiree health benefits,” the benefits council warns.


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