The U.S. Supreme Court will not be discussing whether employers have a right to reduce retiree health benefits when retirees become eligible for Medicare.

The court let the practice continue by deciding Monday not to review a June 2007 3rd U.S. Circuit Court of Appeals decision on AARP v. EEOC.

The Supreme Court did not say why it has declined to take up the case.

The appeals court held that employers can coordinate retiree health benefits with Medicare without violating the federal Age Discrimination in Employment Act.

The Equal Employment Opportunity Commission came out with guidance in December 2007 confirming that it believes employers can coordinate retiree health benefits with Medicare.

The Supreme Court’s decision to “deny certiorari” effectively upholds the EEOC guidance as well as the 3rd Circuit ruling, experts say.

Both the appeals court ruling and the EEOC guidance are based on a section of the ADEA that gives the EEOC the authority to provide reasonable exceptions to any and all provisions of the ADEA if the EEOC finds the exceptions to be in the public interest.

The AARP, Washington, which asked the Supreme Court to review the 3rd Circuit ruling, says it is deeply disappointed about the Supreme Court’s refusal to take up the case.

“The court’s action clears the way for employers to discriminate by reducing or terminating benefits for older retirees simply because they’ve turned 65 years old,” says AARP Legislative Policy Director David Certner.

If the EEOC had not established a two-tier system for retiree benefits, employers would have had the authority under an earlier court ruling to simply reduce or eliminate retiree health benefits altogether “in a manner that treated pre-Medicare-eligible and Medicare-eligible retirees equally,” EEOC officials argued in a brief.

The American Benefits Council, Washington, also is welcoming the Supreme Court ruling.

If employers could not coordinate retiree health coverage with Medicare “employers would — for practical purposes — have been compelled to reduce retiree health benefits for younger retirees not eligible for Medicare,” ABC President James Klein says in a statement.