EEOC Rules on Benefits

Article excerpt

Byline: Gregory Lopes, THE WASHINGTON TIMES

The Equal Employment Opportunity Commission is exempting from age-discrimination regulations employers who cut benefits for retirees old enough to qualify for Medicare.

Despite opposition from the nation's leading lobby representing seniors, the move by the federal agency is a clarion call for the need for some kind of reform to address soaring health care costs that are crippling employers' bottom lines.

Premiums for employer-sponsored health insurance rose an average of 6.1 percent this year and have increased 78 percent since 2001, according to surveys by the Kaiser Family Foundation.

The EEOC proposed the rule in response to a decision in 2000 by the U.S. Court of Appeals for the 3rd Circuit that held that the Age Discrimination in Employment Act requires employers to spend the same amount on health insurance benefits provided Medicare-eligible retirees as those received by younger retirees.

The commission said that after the 2000 decision, labor unions and employers alike maintained that complying with the decision would result in companies reducing or eliminating the retiree health benefits they were providing - leaving millions of retirees under 65 with less health insurance, or no health insurance at all.

The rule, published Wednesday, creates an explicit exemption from age-discrimination laws for employers that scale back benefits of retirees 65 and over. The rule makes it clear they can spend more on retirees under 65 years of age than those over 65 without running afoul of age-discrimination laws.

Further, under the new rule, employers may, if they choose, provide retiree health benefits only to those retirees who are not yet eligible for Medicare. And benefits can be "altered, reduced or eliminated" when a retiree becomes eligible for Medicare. …