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July 5, 2007

Retiree Health Coordination on the Move Again?

For the last several years, there has been an unresolved issue relating to retiree health coverage and the Age Discrimination in Employment Act (ADEA).  A few years ago, a Third Circuit Court decided that it would be a violation of the ADEA for an employer to coordinate retiree health benefits with Medicare.  In other words, employers would be prohibited from providing greater benefits for pre-Medicare eligible retirees, than for post-Medicare eligible retirees. 

The EEOC issued proposed regulations, stating that employers could, in fact, coordinate retiree health plans with Medicare, without violating the ADEA.  On Monday, June 4, 2007, the Third Circuit Court of Appeals upheld the right of the EEOC to issue these regulations; thus, allowing employers to proceed with retiree health plans that coordinate benefits with Medicare (AARP v. EEOC, No. 05-4594 (3rd Cir. June 4, 2007).

This should come as welcome news to employers who offer retiree health benefits.  However, please note that an attorney for the AARP has indicated that it will seek a review of this decision.

 

The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this Benefit Beat is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.

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