USA: EEOC Ruling Hits Older Retirees

WASHINGTON DC (AARP Bulletin), January 16, 2008: Thousands of retirees age 65 and older may be digging deeper into their pockets to pay for supplemental health care coverage following a federal ruling that permits employers to cut benefits for retirees who are eligible for Medicare. The Equal Employment Opportunity Commission ruling last month allows employers to treat younger and older retirees differently without fear of being sued for age discrimination. It permits companies to maintain or spend more on benefits for younger retirees who aren't eligible for Medicare while reducing or eliminating benefits for older retirees. The EEOC says employers would be more likely to drop health care coverage for all retirees if they had to spend the same amount on insurance for both groups. Bearing the brunt of the new regulation will be older retirees who got private health insurance through their former employer and used Medicare as a backup, or supplemental provider. To maintain the same level of coverage, they will be forced to buy a Medigap policy that supplements Medicare—at a cost of about $100 to $300 per month. AARP has asked for a U.S. Supreme Court ruling that the EEOC lacks authority to issue the regulation. The senior group argues that the regulation is discriminatory and shifts the burden of cost to older retirees. "Before, we assumed the age discrimination law protected people 65 and older and ensured they'd get retiree health benefits to the same extent their younger co-retirees did. Now employers can terminate benefits for people at 65, or offer them less, and many employers say that's exactly what they'll do," says John Rother, AARP's Group Executive Officer for Policy and Strategy. "This has a real economic impact for the people affected." But Robert Hayes, president of the nonprofit Medicare Rights Center, a consumer group, supports the EEOC ruling, saying it recognizes the great need for early retirees under age 65 to get health care coverage. "Sadly, employers have been running, not walking, away from retiree health coverage," says Hayes. "Among the people most hurt by that have been retirees not yet eligible for Medicare." Indeed, as health care costs have skyrocketed, health benefits for all retirees have steadily declined for more than a decade. The General Accounting Office, a congressional auditing agency, said in a 2001 report that about 40 percent of employers offered retirees health care benefits in 2000 compared with about 70 percent of employers in the 1980s. Dallas Salisbury, president of the Employee Benefits Research Institute, says he hoped the new rule would "slow the rate of elimination of such benefits." He also says the rule may lead some employers that previously dropped health care coverage to reinstate those benefits. By Carole Fleck Copyright 1995–2008, AARP.