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January 10, 2008

Retiree Health and Age Discrimination…the Final Scene?

On December 26, 2007, the Equal Employment Opportunity Commission (EEOC) issued final regulations supporting the long-standing practice of coordinating retiree health benefits with Medicare.  This matter was challenged several years ago in the Erie County case (see Retiree Health Coordination on the Move Again?, Retiree Health Rules Rolling Again, and Coordination of Retiree Health Benefits with Medicare).  Since then, the pendulum has swung back and forth.  While it may still be swinging, its arc is short and slow. 

According to the final regulations, for retiree health plan purposes only, an employer is allowed to modify, reduce, or even terminate benefits for those retirees who become entitled to Medicare.  The purpose of the regulations is to make clear that employers have this latitude.  The EEOC indicates that its goal is to give employers a comfort level with maintaining retiree health benefits, by allowing the coordination with Medicare.  Also see Questions and Answers about the EEOC’s Retiree Health Rule.

When this practice was challenged several years ago, there was some concern that employers would terminate retiree health coverage altogether, rather than risk being denied the right to coordinate with Medicare.  While the AARP has requested a review by the Supreme Court (see Retirees and the ADEA: a Moving Target), every indication is that these final regulations, which became effective December 26, 2007, will stand.

 

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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