EEOC Defends Recent Decision on Employer Health Benefits for Retirees Older Than Age 65
Responding to negative reaction about the Equal Employment Opportunity Commission's recent decision to allow employers to drop retirees' health benefits once they become eligible for Medicare, EEOC Commissioner Leslie Silverman on Monday defended the move at a hearing of the Senate Special Committee on Aging, saying it was intended to "preserve benefits," the Chicago Tribune reports (Taylor, Chicago Tribune, 5/18). EEOC in April voted 3-1 to approve a rule under which employers that reduce or eliminate health benefits for retirees who qualify for Medicare do not violate civil rights law on age discrimination. In addition, the decision allows employers to reduce or eliminate health benefits for retirees who qualify for state-sponsored health benefits similar to Medicare. The decision requires approval from the Office of Management and Budget but likely will stand. The ruling reverses EEOC's prior policy, as well as an August 2000 ruling by the 3rd U.S. Circuit Court of Appeals stating that federal law requires employers to ensure that pre- and post-Medicare-eligible retirees receive health benefits of "equal type and value." The EEOC said that it had the power to make "reasonable exemptions" in the public interest to the Age Discrimination in Employment Act of 1967 (California Healthline, 4/27). Critics of the EEOC decision say the commission "opened the door for employers to drop benefits" and note that many company-sponsored health plans provide better benefits than Medicare, the Tribune reports. Testifying before the Senate committee, David Certner, director of federal affairs for AARP, said, "The fact is that companies are looking to get out of this benefit anyway. Changing this rule will only encourage more employers to drop this benefit."
Silverman, who "set out to portray the EEOC as an agency between a rock and a hard place," said the EEOC was trying to maintain benefits for younger retirees, according to the Tribune. She noted that the appeals court ruling would have made it unlawful for companies to provide bridge policies or other supplemental health plans until retirees are Medicare-eligible. She stated that EEOC was concerned that the ruling would push employers to drop retiree coverage altogether because of cost, and as a result the commission feared that early retirees could be forced to go years without health coverage. "Unfortunately, it made a better story to say the EEOC was endorsing discrimination," she added. The Tribune reports that AARP President-Elect Erik Olsen is also scheduled to testify before the Senate committee (Chicago Tribune, 5/18).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.