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Supreme Court to Discuss EEOC Retiree Health Plan Exemption

The practical effect of the EEOC rule, which the agency finalized last year after a lower court ruling, is that employers can provide a two-tier system of retiree heath care coverage.

March 18, 2008
Related Topics: Retirement/Pensions, Benefit Design and Communication, Discrimination and EEOC Compliance, Latest News
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The U.S. Supreme Court has scheduled a discussion for Friday, March 21, on whether it will review a federal appeals court ruling that effectively allows employers to reduce health care benefits when retirees become eligible for Medicare without facing age discrimination charges.

In a unanimous ruling in June, a three-judge panel of the 3rd U.S. Circuit Court of Appeals said the Equal Employment Opportunity Commission had the authority to issue a rule exempting retiree health plans from the Age Discrimination in Employment Act when those plans reduce benefits for retired workers after they become eligible for Medicare.

The rule was proposed by the EEOC in 2003 to counteract a decision by the 3rd Circuit in 2000 that found the plans were subject to ADEA. Employers with health care plans that cut benefits when retirees reached age 65 were exposed to age discrimination suits by that decision.

The practical effect of the EEOC rule, which the agency finalized last year after the 3rd Circuit ruling, is that employers can provide a two-tier system of retiree heath care coverage, with younger retirees receiving richer benefits than Medicare-eligible retirees.

AARP has asked the Supreme Court to review the 3rd Circuit ruling that allowed the EEOC to issue the ADEA retiree health care plan exemption rule.

It isn’t known how soon the Supreme Court will decide after the Friday discussion—part of the justices’ regular weekly conference—whether to review the lower court ruling.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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