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April 23, 2004 at 08:00 PM
NU Online News Service, April 23, 2004, 1:13 p.m. EDT — The U.S. Equal Employment Opportunity Commission voted Thursday to let employers end retiree health benefits for retirees who become eligible for Medicare.[@@]
The 5-member commission approved a proposed final rule that would let employers coordinate retiree health benefits with eligibility for Medicare and comparable state health benefit programs, the EEOC says.
The EEOC must submit the approved proposed rule to federal agencies for final review. The EEOC must wait for the interagency review before implementing the rule.
The federal Age Discrimination in Employment Act prohibits employers from discriminating against most older employees and retirees on the basis of age.
But the EEOC notes that employers have coordinated retiree health benefits with Medicare benefits for decades.
The 3rd U.S. Circuit Court of Appeals threw coordination of efforts into question in a 2000 ruling on Erie County Retirees Association vs. County of Erie. The court held that ADEA requires employers to assure that retirees who are and are not eligible for Medicare receive health benefits of equal type and value.
“This rule is intended to ensure that the ADEA does not have the unintended consequence of discouraging employers from providing valuable health benefits to retirees,” EEOC Chair Cari Dominguez says in a statement about the ruling.
Adding rules that alienate sponsors of retiree health plans is counterproductive, because most employers offer retiree health benefits voluntarily and have no obligation to continue to do so, Dominguez notes.
