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EEOC Decision Could Help Maintain Employer-Sponsored Health Insurance

Armen Hareyan's picture

Employer-Sponsored Health Insurance

A recent decision by the EqualEmployment Opportunity Commission that employers can legallyeliminate or reduce health benefits for retirees when they reach age65 and become eligible for Medicare and retain benefits for retireesyounger than age 65 "is a welcome step that could help slow thedeterioration of employment-based health insurance" and "helpfar more people than it hurts," according to a NewYork Times editorial (New York Times, 1/5).The decision allows employers to establish two classes of retirees --those younger than age 65 and those ages 65 and older -- and offerdifferent benefits to each group. In addition, the decision allowsemployers to eliminate or reduce health benefits for the spouses ordependents of retirees ages 65 and older (Kaiser Daily Health PolicyReport, 1/2).

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According to the editorial, the decision is"based on a plausible premise: If employers struggling with therising costs of health care have to provide equal benefits, they willbe more likely to eliminate all of their retiree coverage or reducebenefits to the younger retires than to increase benefits to theirMedicare-eligible retirees."

The editorial states that,although the "regulation is clearly unfair to people who werewilling to accept lower wages while working in return for lifetimehealth benefits," no "pain-free answer" exists for the"burden of rising health care costs." The editorialconcludes, "The least painful solution is to let Medicare carrythe burden for those 65 and older while freeing employers to focus onyounger retirees, who need help the most" (New York Times,1/5).

Reprinted with permission fromkaisernetwork.org.You can view the entire KaiserDaily Health Policy Report, search the archives, andsign up for email delivery at kaisernetwork.org/email. The Kaiser Daily Health Policy Report ispublished for kaisernetwork.org, a free service of The Henry J.Kaiser Family Foundation.