EEOC Rules that ADEA Is No Barrier to Employers Coordinating Health Plans with Medicare

The U.S. Equal Employment Opportunity Commission (EEOC) has published a final rule allowing employers that provide retiree health benefits to continue the longstanding practice of coordinating those benefits with Medicare (or comparable state health benefits) without violating the Age Discrimination in Employment Act (ADEA).

Following a period of litigation arising from a 2000 federal circuit court decision that the ADEA requires that the health insurance benefits received by Medicare-eligible retirees be the same, or cost the employer the same, as the health insurance benefits received by younger retirees, the regulation now provides an exemption for ADEA coverage for the common and longstanding employer practice of "coordinating" those benefits with Medicare by supplementing the government healthcare or by offering retirees a "bridge" benefit to cover health expenses after employees retire until they become Medicare-eligible.

“Implementation of this rule is welcome news for America’s retirees, whether young or old,” said Commission Chair Naomi C. Earp. “By this action, the EEOC seeks to preserve and protect employer-provided retiree health benefits which are increasingly less available and less generous. Millions of retirees rely on their former employer to provide health benefits, and this rule will help employers continue to voluntarily provide and maintain these critically important benefits in accordance with the law.”

Source: Equal Employment Opportunity Commission Press Release (December 26, 2007)

Other Sources: Des Moines Register "Don't make it harder to give health benefits to retirees" (January 2, 2008); AARP News Release (December 27, 2007)