Retiree. health plans cut OK'd
EEOC Companies can end coverage for former workers when they turn 65 and can qualify for Medicare
Companies can scale back their retiree health care coverage once their former employees.qualify for Medicare,
the Equal Employment Opportunity Commission has Affirmed.
The ruling, which took effect Wednesday, sanctions the prevailing practice of employers offering health
insurance for retirees younger than 65 and then trimming ox eliminating benefits once they, receive Medicare.The commission
decided the practice does not violate age. discrimination laws.In contrast to their pensions, workers are not vested in retiree
health benefits, so companies can terminate them.
Employers have dramatically curtailed their retiree health coverage. Only 35 percent of employers with more
than 200 workers offered such coverage in 2006; .down from 66 percent in 1988, according to the Kaiser Family Foundation.Coverage
is even less prevalent for older retirees. Only 21 percent of large employers offer such benefits to Medicare eligible retirees,
while 31 percent do to younger ones, according to a recent study by Mercer, a Manhattan based consulting company.The EEOC
began investigating the issue after a 2000 court decision ruled that the Age Discrimination in Employment Act required employers
providing retiree health benefits to do the same, or spend the same amount on, benefits for Medicare eligible retirees as
for younger retirees.An unusual coalition of employers and labor unions banded together to fight the ruling, saying it would
lead companies to reduce benefits for younger retirees.The commission agreed and said its latest ruling wouldsafeguard retiree
health benefits."By this action, the EEOC seeks to preserve and protect employer provided retiree health benefits which are
increasingly less available and less generous," Naomi C. Earp, the commission's chairwoman, said in a statement.Reaction to
the EEOC ruling was mixed: Employer groups hailed it while the HARP condemned it.
The EEOC's action will not prompt companies to cut back on benefits for older retirees, but will instead
allow them to keep retiree coverage in place for younger ones, said James Klein, president of the American Benefits Council,
which represents large companies.It allows companies to provide coverage to an otherwise vulnerable population. those who
are no longer actively employed but are also not eligible for Medicare," he, said.
But the AARP, which asked for a temporary restraining order in an ultimately unsuccessful attempt to block
the rule from taking effect, said the action would shift health care costs to older workers."It is a wrongheaded move to legalize
discrimination, allowing employers to back off their health care commitments based on nothing more than age," said David Certner;
AARP's legislative policy director.
