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December 27, 2007 at 05:06 AM
Employers can reduce or eliminate health coverage for retirees who are eligible for Medicare without violating the Age Discrimination in Employment Act.
The Equal Employment Opportunity Commission has come to that conclusion in a final rule that creates regulations dealing with the effects of the ADEA on retiree health benefits.
Federal law does not ordinarily require employers to provide health benefits for retirees either under or over 65, the usual Medicare eligibility age, EEOC officials write in a preamble to the new final rule, which appeared Wednesday in the Federal Register.
A 2000 4th U.S. Circuit Court of Appeals ruling and EEOC policy reflecting that ruling held that employers were guilty of ADEA violations if they reduced or eliminated retiree health benefits for Medicare-eligible retirees, unless the employers could show that the benefits for Medicare-eligible retirees were equivalent to the benefits provided for other retirees.
The AARP, Washington, has led efforts to oppose coordination of private retiree health benefits with Medicare and state retiree benefits.
The American Benefits Council, Washington, and a variety of other employer groups and labor groups have supported efforts to allow coordination of private and public retiree health benefits.
“Labor organizations, benefits experts, state and municipal governments, and employers informed us that our actions were further eroding employer-sponsored retiree health benefits by creating an additional incentive for employers to reduce, or eliminate altogether, health benefits for retirees,” EEOC officials write in the preamble to the final rule.
In 2003, the EEOC published a notice of proposed rulemaking suggesting that it would permit employers to coordinate their own retiree benefits with Medicare benefits after all.
