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EEOC rules on retiree health benefits
WASHINGTON (12/28/07)—The Equal Employment Opportunity Commission (EEOC) has issued a controversial new rule that would allow employers who provide retiree health benefits to offer differing treatment to retirees under 65 years old and those above that age. The EEOC in a release issued this week said the rule is intended to “to preserve and protect employer-provided retiree health benefits which are increasingly less available and less generous.” But, the Dec. 27 issue of The New York Times reported, the AARP and other groups that advocate for older Americans criticized the rule that carves out an exemption for retiree health benefits from age discriminiation laws for employers. The AARP projected that 10 million people could be adversely affected by the rule. The EEOC rule clarifies the legality of a practice in which employers coordinate retiree health benefits they provide with Medicare, without having to ensuring that the benefits received by Medicare-eligible retirees are identical to those received by younger retirees. Employers sometimes reduce or eliminate retiree health benefits once Medicare eligibility kicks in. That practice came under fire after a 2000 ruling by the U.S. Court of Appeals for the Third Circuit regarding the Age Discrimination in Employment Act (ADEA). The court held that the ADEA required that the health insurance benefits received by Medicare-eligible retirees be the same, or cost the employer the same, as the health insurance benefits received by younger retirees. The EEOC noted that it had voted to approve this regulation in April 2004, but was blocked from doing so when the AARP filed suit against the commission. The court ultimately issued an opinion, according to the EEOC release, that the rule was “a reasonable, necessary and proper exercise of [EEOC’s] authority.” EEOC Legal Counsel Reed Russell said, “Our rule makes clear that it is lawful for employers to continue to provide retirees with the health benefits they currently receive. Contrary to what some interest groups have erroneously asserted, the rule will not require any cuts to retiree benefits.”
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