EEOC Drops Policy Ensuring Retirees Have Same Benefits
The Equal Employment Opportunity Commission voted last week to no longer pursue age-discrimination cases against employers that offer different health plans to retirees who are eligible for Medicare from those who are not, the Washington Post reports. The announcement is a reversal of an EEOC policy that had said that retiree health plans that are reduced or eliminated on the basis of Medicare eligibility or age violate the Age Discrimination in Employment Act. To "encourage" employees to retire early, firms often offer coverage to younger retirees and "reduce or drop" the benefits when a retiree turns 65 and qualifies for Medicare coverage, the Post reports. However, last year the 3rd U.S. Circuit Court of Appeals ruled that the ADEA applies to retirees and their health insurance. While this ruling stands and retirees can still sue former employers based on the decision, the EEOC voted unanimously last week to drop its "compliance manual language" that was based on the court ruling. The commission voted to change the policy after hearing "concerns" from businesses and labor groups that it might encourage employers to drop employer-sponsored retiree health benefits, the Post reports. Cari Dominguez, the commission's chair, said in a statement that the EEOC will develop a new policy "consistent with the ADEA, that does not discourage employers from providing this valuable benefit." Susan Meisinger, COO of the Society for Human Resource Management, was "pleased" with the decision, as the old policy could have exposed employers to liability for offering coverage to older retirees. "[The change] reflects a deeper understanding of the implications of the policy and the potential for employers dropping health care benefits at a time when public policy is being crafted to increase employers' interest in providing health care benefits" (Crenshaw/Grimsley, Washington Post, 8/22).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.