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Employers Allowed To Reduce Health Care Benefits For Medicare-Eligible Retirees

Armen Hareyan's picture

The U.S. Supreme Court on Monday refused to hear a legal challenge brought by AARP concerning an Equal Employment Opportunity Commission ruling that employers can reduce benefits for retirees who reach age 65 and become eligible for Medicare, the AP/Philadelphia Inquirer reports (AP/Philadelphia Inquirer, 3/25).

The EEOC ruling, published in the Federal Register, allows employers to create two classes of retirees -- those younger than age 65 and those older than 65 -- and offer different benefits to each group. In addition, the ruling allows employers to eliminate or reduce benefits provided to spouses or dependents of retirees older than 65 (Kaiser Daily Health Policy Report, 1/2).

AARP argued that the EEOC ruling violated age discrimination laws (Lipman, Cox/Atlanta Journal-Constitution, 3/25). Supporters of the EEOC rule say it encourages companies to maintain benefits for their retirees, because without the ability to reduce benefits for some, employers could eliminate all retiree benefits.

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Rae Vann, general counsel for EEOC, said, "This is good news because it clears up the lingering doubts about the law," adding, "From a practical point of view, it is also good for retiree health benefits. It means more employers will continue to provide these benefits."

AARP in a statement said it was "deeply disappointed" by the court's decision, which it believes "clears the way for employers to discriminate by reducing or terminating benefits for older retirees simply because they've turned 65" (Savage, Los Angeles Times, 3/25).

David Certner, AARP's legislative policy director, said, "This double standard -- one tier of coverage for those under 65, and another, lower tier for those 65 and over -- is especially troubling because it comes from the EEOC, the federal government agency created to enforce anti-discrimination policies." Certner added, "The timing of this new rule couldn't be worse. Due to rising costs and fixed incomes, many retirees are already forgoing needed services that have simply become unaffordable" (Cox/Atlanta Journal-Constitution, 3/25).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation© 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.