<nobr>Dec 27, 2007</nobr>

In a Victory for ERIC and Employers, EEOC Issues Final ADEA Exemption Rule

In a major victory for ERIC and major employers, the Equal Employment Opportunity Commission (EEOC) December 26, 2007, formally and finally announced its exemption to the Age Discrimination in Employment Act, allowing employers to reduce or eliminate health benefits of retirees when they become eligible for Medicare.

EEOC’s action is a particular victory for ERIC, which spent several years lobbying the agency to make use of its exemption authority and Congress in defense of that authority. ERIC also filed several amicus briefs defending the agency’s authority to issue the exemption. The EEOC’s action comes after several lawsuits filed against the EEOC by AARP. ERIC filed amicus briefs at several stages during the extensive litigation. In addition, ERIC met extensively with EEOC urging that they issue the exemption. The matter has been in flux for several years and employers have anxiously awaited a decision by the court.

The Federal Register included a published statement from the Commission, in which the EEOC said, “The final rule is not intended to encourage employers to eliminate any retiree health benefits they may currently provide.” Citing the enormous cost inflation of employer-sponsored health plans, which have gone up 78 percent since 2001, the Commission determined that the exemption was necessary to assist and encourage employers to create and maintain health benefits to their retirees.

The new rule holds that employers may provide retiree health benefits to “only those retirees who are not yet eligible for Medicare,” and that when a retiree becomes eligible for Medicare their health benefits plan can be “altered, reduced, or eliminated” by their employer.


Websites:

Final Rule on ADEA and Retiree Health Benefits

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