A federal court in Philadelphia has issued a ruling that could help employers continue to offer richer health benefits for retirees under age 65 than for retirees who are old enough to qualify for Medicare.[@@]
U.S. District Judge Anita Brody made the ruling in connection with a case pitting AARP, Washington, against the Equal Employment Opportunity Commission.
AARP says the federal Age Discrimination in Employment Act requires employers to offer the same health benefits to early retirees and retirees who have reached the normal retirement age.
The EEOC, employer groups and unions have argued that letting employers coordinate retiree health benefits with Medicare benefits increases the likelihood that employers will continue to offer retiree health benefits.
Technically, the new ruling focuses on whether the EEOC has the authority to issue regulations that will let employers coordinate retiree health benefits with Medicare benefits.
In March, Brody delayed implementation of the EEOC regulations. She later reviewed whether a new test established by the U.S. Supreme Court would favor the EEOC and decided that it would.
Although Brody has given the EEOC permission to issue the new regulations, she also has stayed the effect of her new ruling pending an appeal to the 3rd Circuit Court of Appeals.
The American Benefits Council, Washington, an employer group, put out a statement praising the new ruling.
“The EEOC rule sensibly validates the long-standing practice that employers are not violating the ADEA if they provide greater health benefits to individuals who retiree early and are not yet eligible for Medicare,” James Klein, president of the benefits council, says in a statement.