EEOC Votes to Limit Retiree Health Benefits

On Thursday, April 22, 2004, the Equal Employment Opportunity Commission (EEOC) voted 3 to 1 in favor of finalizing its proposed rule allowing employers to reduce or eliminate the amount of health benefits retirees receive when they become eligible for Medicare at the age of 65.  The regulation, which must be reviewed for comment by other government agencies and the Office of Management and Budget before being finalized, creates an exemption from the Age Discrimination in Employment Act (ADEA). 

This exemption to ADEA allows employers to coordinate retiree health benefits with Medicare (or a comparable state-sponsored health benefit), by providing higher levels of health coverage to early retirees who are not yet eligible for Medicare than is provided to older retirees who are eligible for coverage under Medicare.  In 2000, the U.S. Court of Appeals for the Third Circuit called this practice into question when it found that such age-based distinctions were unlawful in Erie County Retirees Association v. County of Erie. 

The final rule has garnered widespread support from employers and unions who view the tiered benefit structure as a method that will enable employers to continue extending health benefits to all retirees.  To view the EEOC press release announcing the rule, please follow this link. 

To discuss this matter with your contact in the Employee Benefits Group at Ice Miller, please use this link to access our directory of attorneys.  If you do not have a contact in the Ice Miller Employee Benefits Group, please feel free to contact Melissa Proffitt Reese, Tara Schulstad Sciscoe or Janine Bosley, who prepared this article.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice.  The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.

Ice Miller is a full-service law firm with offices in Chicago, Indianapolis and Washington, D.C.  The 27 employee benefits professionals of Ice Miller provide legal and consulting services for retirement and health and welfare benefits and executive compensation to public and private employers, financial institutions, insurance companies and other types of benefit service providers.
 
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