In
response to a suit filed by
In April 2004, the EEOC board approved final regulations that would exempt
retiree medical benefits from the Age Discrimination in Employment Act (ADEA)
if an employer decides to change or eliminate its employer-sponsored health
care benefits when retirees become eligible for Medicare. Those regulations,
however, have not been given final approval and have not been published in the Federal
Register.
The
EEOC regulations were in response to the 2000 decision of the Third Circuit
U.S. Court of Appeals in Erie County Retirees Association v. County of Erie (220
F.3d 193), in which the Third Circuit held that employer-sponsored health care
plans that provide different benefits for Medicare-eligible retirees than for
retirees younger than age 65 violate the ADEA.
In
a press release, EEOC chair Cari M. Dominguez stated,
"I'm saddened and disappointed by AARP's premature legal action. The
Commission and AARP share values and goals for protecting retirees' health
benefits. But AARP, after failing to work in good faith to offer a viable
compromise, is now trying to block a Commission rule that would safeguard those
benefits. The rule has drawn strong support from both the employer and labor
communities as well as from members of Congress on both sides of the aisle. The
major teachers unions continue to urge the Commission to act because benefits
of thousands of teachers nationwide are in jeopardy without the Commission's
rule."
According
to Ms. Dominguez, "The new rule will help safeguard existing and future
health benefits for
Specifically,
the rule will clarify that employers may continue to coordinate retiree health
benefit plans with eligibility for Medicare or a comparable state health
benefit without violating the ADEA. It does not change current employer
practices or plans, nor does it affect any other legal obligations an employer
may have. On the contrary, the rule removes an impediment to employers so that
they may continue providing retirees with critical health care coverage. Any
delay in implementing the rule will endanger vital protections for retirees.
"The
Commission is confident--on both policy and legal bases--in its authority to
implement the rule, and is prepared to defend that position. The ADEA
authorizes the Commission to approve exemptions to the law in those rare
instances in which application of the law would be contrary to the public
interest. Because the Erie County decision was contributing to a
continuing decline in the availability of employer-provided retiree health
benefits, the Commission concluded that it would be in the best interest of
employers, employees, and retirees to permit employers to offer these benefits
to the greatest extent possible."
In
a prepared statement, James Klein, president of the American Benefits Council,
said, "We strongly support the EEOC's efforts to
clarify the application of the age discrimination law to retiree health
benefits and believe the rule will simply reassure employers that the valuable
health benefits they provide today to retirees of all ages comply with federal
law." Mr. Klein added that "AARP is simply ignoring the fact that
many retirees could lose coverage entirely if employers were told they must
spend as much on health benefits for retirees who already have Medicare
coverage as they spend on early retirees who have no coverage other than the
health plan from their employer."