EEOC Issues Rule
on Retiree Health Benefits
[Posted 01/03/2008]
The
Equal Employment Opportunity Commission (EEOC)
issued a final rule on December 26 that allows
employers to coordinate retiree health benefits with
Medicare (or comparable state benefits) without
violating the Age Discrimination in Employment Act (ADEA).
The
new regulation provides an exemption for ADEA
coverage for the employer practices of coordinating
benefits with Medicare and bridging benefits to
cover health expenses for employees who have
retired but are not yet Medicare-eligible.
In
essence, the ruling allows employers to spend more
on benefits for retirees under 65 years of age than
those over 65. The expectation is that retirees in
both age groups will receive essentially the same
benefits, but that employers will shift some or all
of the financial responsibility to the government
once a retiree becomes eligible for Medicare.
EEOC
officials do not believe that the practice of
coordinating benefits discriminates against older
workers, but rather minimizes the risk of employers
reducing or eliminating retiree benefits.
“Implementation of this rule is welcome news for
America’s retirees, whether young or old,” said
Commission Chair Naomi C. Earp, in a statement. “By
this action, the EEOC seeks to preserve and protect
employer-provided retiree health benefits, which
are increasingly less available and less generous.
Millions of retirees rely on their former employer
to provide health benefits, and this rule will help
employers continue to voluntarily provide and
maintain these critically important benefits in
accordance with the law.”
While
supported by a number of organizations, the
American Association of Retired Persons (AARP)
condemned the decision. “This rule gives employers
free rein to use age as a basis for reducing or
eliminating healthcare benefits for retirees 65 and
older,” said AARP attorney Christopher Mackaronis,
who said the ruling could affect as many as 10
million people.
The
EEOC said it proposed the rule in response to a
decision in 2000 by the US Court of Appeals for the
3rd Circuit that held that the Age Discrimination
in Employment Act requires employers to spend the
same amount on health insurance benefits provided
Medicare-eligible retirees as those received by
younger retirees.
The
commission said that after the 2000 decision, labor
unions and employers alike maintained that
complying with the decision would result in
companies reducing or eliminating the retiree
health benefits they were providing, leaving
millions of retirees under 65 with less health
insurance, or no health insurance at all.
Related Links:
Federal Register
Yahoo News Article
The New York Times News Article
Workforce Management News Article
Q&A about EEOC's Retiree Health Rule
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