[AARP v. EEOC, No. 05-CV-509 (E.D. Pa. 2005)]
For a copy of the EEOC Press Release: http://www.eeoc.gov/press/2-04-05.html
For a copy of the AARP Press Release: http://www.aarp.org/research/press/presscurrentnews
/Articles/item706103322.html
In response to a lawsuit filed by AARP, the EEOC has agreed that it
will not implement regulations on retiree health benefits before April 5,
2005. The regulations would permit employers to reduce, change, or
eliminate retiree health benefits when the retirees become eligible for
Medicare. The EEOC had approved proposed final regulations in 2004 (see
our article at http://www.ebia.com/static/weekly/articles/2004/
GHPM040429EEOC.html
(Premium Access subscription required)) that specifically permit employers
to coordinate retiree health benefits with Medicare eligibility without
violating the Age Discrimination in Employment Act (ADEA). The regulations
were the EEOC's latest response to the Third Circuit's decision in Erie
County Retirees Assoc. v. County of Erie (see our article at http://www.ebia.com/weekly/articles/2000/
HIPAA000810ErieCoRetirees.html
(Premium Access subscription required)), which held that reducing
employer-sponsored retiree health benefits when a retiree became eligible
for Medicare violated the ADEA unless the equal cost/equal benefit test
was satisfied. Under the standard imposed by the Third Circuit, it was
difficult for employers to terminate retiree coverage, or convert the
coverage to a Medicare supplement, when a retiree turned 65.
AARP has taken the position that the EEOC acted illegally by creating an exemption permitting employers to reduce or eliminate health insurance benefits for retirees age 65 and over. The EEOC has issued a press release stating that the Erie County decision is "contributing to a continuing decline in the availability of employer-provided retiree health benefits," and that the regulations would "permit employers to offer these benefits to the greatest extent possible." AARP has also issued a press release, stating that the regulations are improper because "the EEOC is charged with preventing age discrimination, not with making health care policy choices that could result in employers eliminating benefits for those who become eligible for Medicare."
EBIA Comment: Employers offering retiree health benefits will have to wait even longer to obtain some badly needed certainty. This lawsuit reflects a deep divide between those who fear that employers will simply stop offering all retiree health benefits if they can't coordinate them with Medicare, and those who believe that employers offering retiree health benefits should treat all retirees the same, regardless of age. Stay tuned--when this lawsuit is resolved, we will report on it in the EBIA Weekly. For more information, see EBIA's Group Health Plan Mandates manual at Section XIX.D ("Retiree Health Benefits and the ADEA").
Contributing Editors: EBIA Staff.
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