BENEFITS BYTE

April 21, 2004
BB 04—49

EEOC Holds Hearing on Finalizing Retiree Health Age Discrimination Rule

The Equal Employment Opportunity Commission (EEOC) is holding a hearing on April 22, to consider finalizing its proposed rule on retiree health benefits http://www.americanbenefitscouncil.org/documents/nprm_fed_register.pdf

The EEOC rule would clarify that an employer-sponsored retiree health plan would not violate the Age Discrimination in Employment Act (ADEA) if it does not provide the same level of benefits to early retirees and older retirees who are eligible for coverage under Medicare.

In an April 20 letter http://www.americanbenefitscouncil.org/documents/eeoc_%20letter_april20 2004.pdf, Council President James Klein urged the EEOC to finalize its retiree health rule and said the clarification will help "stabilize employer-sponsored retiree health benefits that are rapidly eroding". The EEOC rule is needed to respond to a Third Circuit Court of Appeals decision in 2000 in Erie County Retirees Association v. County of Erie http://www.americanbenefitscouncil.org/documents/underlying_eric_county _brief.pdf> that held that lesser benefits provided to retirees after they are eligible for coverage under Medicare violated the age discrimination statute. The result in that case was the employer reduced benefits to pre-Medicare retirees without any increase in benefits for older retirees who were eligible for Medicare in order to be in compliance with ADEA. Many employers have indicated that they would be forced to make a similar decision, or eliminate retiree health coverage entirely, unless EEOC acts to clarify or reverse the Erie County retiree health ruling.

The EEOC proposed retiree health rule would exempt from ADEA the coordination of retiree health benefits with Medicare. The rule would rely on the agency's discretionary authority when ADEA was enacted to exempt certain actions from the scope of the age discrimination statute. The Council and a coalition of other employer organizations, health plans and teachers' unions have all urged EEOC to finalize its proposed rule. Opposition to the rule has come largely from the AARP, which has argued that the rule would encourage employers to reduce or eliminate retiree health benefits.

For additional information, please contact Paul Dennet , Council vice president, health policy, or Maria Ghazal, Council director, health policy. Both can be reached by phone at (202) 289-6700.

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The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.