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EEOC Will Review Its Policy On Retiree Health Insurance (2001)

By Steve Kreisberg

In August, the Equal Employment Opportunity Commission (EEOC) announced that it was rescinding and reviewing its policy regarding the application of the Age Discrimination in Employment Act (ADEA) to retiree health care benefits. As reported in the Collective Bargaining Reporter (see "Age Discrimination & Retiree Health Benefits" in CBR No. 1, 2001), the EEOC’s regulations required employers to provide benefits to post-age 65 retirees of “equal benefit or equal cost” to those provided to pre-age 65 retirees.

This issue arises when an employer offers retirement under its pension system to employees who have not reached age 65. Pre-65 retirement is common in public employee pension systems. In such situations, the employer frequently offers post retirement health care benefits so employees can have a benefit “bridge” to age 65 when the retiree would then be eligible for Medicare. Many employers would subsequently reduce or eliminate health care benefit coverage once the retiree becomes eligible for Medicare.

The EEOC, and the Federal Court of Appeals for the Third Circuit, have found that when an employer reduces benefits on the basis of Medicare eligibility, the reduction is illegal if the combination of Medicare and the lower benefits is less than the benefit level that was provided to the retiree prior to attaining Medicare eligibility. The enforcement of the policy in this manner has alarmed a number of employee, employer and labor groups who are concerned it may discourage employers from offering health care benefits to pre-age 65 retirees. The EEOC cited these concerns in its announcement that it would not enforce the policy while it is under review.

EEOC Vice Chair, Paul Igaski, stated that the agency "must carefully craft a policy which protects the rights of older retirees but does not deter employers from providing health benefits to retirees in general."

More information about the EEOC's recission and review of the policy is available at the EEOC's Web site, or from the Department of Research and Collective Bargaining Services at (202) 429-1215.

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