EEOC APPROVES PROPOSAL TO EXEMPT RETIREE HEALTH PLANS FROM AGE DISCRIMINATION IN EMPLOYMENT ACT

Rule Would Permit Employers to Continue Providing Valuable Retiree Health Benefits

WASHINGTON -  During a public meeting today, the U.S. Equal Employment Opportunity Commission (EEOC) voted to approve a proposed final rule that would permit employers, under the Age Discrimination in Employment Act (ADEA), to lawfully coordinate retiree health benefit plans with eligibility for Medicare or a comparable state-sponsored health benefit.  This common and long-standing employer practice was called into question in 2000, when the U.S. Court of Appeals for the Third Circuit (Erie County Retirees Association v. County of Erie) held that the federal statute requires employers to assure that pre- and post- Medicare eligible retirees receive health benefits of equal type and value.

"This rule is intended to ensure that the ADEA does not have the unintended consequence of discouraging employers from providing valuable health benefits to retirees," said Chair Cari M. Dominguez, emphasizing that the General Accounting Office has estimated 10 million retired individuals aged 55 and over count on employer-sponsored health plans as either their primary source of health coverage or as a supplement to Medicare.  "Such benefits are provided on a voluntary basis at the discretion of each employer and the Commission is acting to preserve these valuable benefits for retirees."

"We know that health benefits are very important to retirees.  Our proposal permits the common-sense practice of coordinating employer-provided retiree health benefits with eligibility for other benefits to continue," added Vice Chair Naomi C. Earp.  "This rule should be welcome news for America's retirees."

The Commission's prior policy, which was rescinded by a unanimous vote in August 2001, had concluded that coordinating retiree health benefits with Medicare eligibility constituted an illegal age-based distinction under the ADEA.  A Notice of Proposed Rulemaking published in the July 14, 2003, Federal Register solicited public comments on the document discussed and voted upon today.

The approved proposal now will be submitted, under Executive Order 12067, to federal agencies for final review and any comments they may wish to submit.  Pursuant to Executive Order 12866, a review at the Office of Management and Budget will follow.  After interagency review, a final rule will be published in the Federal Register.  Only after all of these steps occur will the rule become final.

In addition to enforcing the ADEA, which prohibits age discrimination against workers age 40 and older, the five-member Commission enforces Title VII of the Civil Rights Act of 1964; the Equal Pay Act of 1963; Title I of the Americans with Disabilities Act of 1990; portions of the Rehabilitation Act of 1973; and sections of the Civil Rights Act of 1991.  Further information about the EEOC is available on the agency's web site at www.eeoc.gov.