Wednesday, February 20, 2008

Retiree health plans

Philly Channel 10 on Feb. 20 discussed a recent EEOC ruling which allows employers to create two classes of employees, thereby curtailing expected health benefits for some. The case is going to the US Supreme Court.

Brian McGuire of AARP was quoted on the issue.

IPBiz notes that this matter may relate to the following:

SUMMARY: The Equal Employment Opportunity Commission is publishing this
final rule so that employers may create, adopt, and maintain a wide
range of retiree health plan designs, such as Medicare bridge plans and
Medicare wrap-around plans, without violating the Age Discrimination in
Employment Act of 1967 (ADEA). To address concerns that the ADEA may be
construed to create an incentive for employers to eliminate or reduce
retiree health benefits, EEOC is creating a narrow exemption from the
prohibitions of the ADEA for the practice of coordinating employer-
sponsored retiree health benefits with eligibility for Medicare or a
comparable State health benefits program.\1\ The rule does not
otherwise affect an employer's ability to offer health or other
employment benefits to retirees, consistent with the law.

Employers are not legally obligated to provide retiree health
benefits, and many do not. Moreover, over the past several years, the
number of employers who offer such benefits has begun to decline.
According to an independent study by the United States General
Accounting Office (GAO), about one-third of large employers and less
than 10% of small employers offered their retirees health benefits in
2000, compared to about 70% of employers in the 1980s.\2\ Of those
employers that do offer coverage, many ``have reduced the terms of
coverage by tightening eligibility requirements, increasing the share
of premiums retirees pay for health benefits, or increasing copayments
and deductibles--thus contributing to a gradual erosion of benefits.''


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