EEOC Not Suing Employers That Offer Separate Pre-Medicare And Medicare-Eligible Retiree Health Benefits

EEOC originally said it would attack two-track retiree benefit plans after the 3rd U.S. Circuit Court of Appeals addressed the issue in August 2000, in a ruling on Erie County vs. Erie County Retirees Association. The ruling held that ADEA requires employers to offer equal health benefits, or equal expenditures on health benefits, to retirees of different ages.

Although EEOC has decided against using the Erie decision as the basis for a series of lawsuits, Dominguez emphasizes that employers must still offer equal health benefits, or equal expenditures on health benefits, to active employees over 65.

The EEOC is also studying the practice of changing benefits once retirees become eligible for Medicare in ways that reduce retirees' total benefits packages.

"Though it is clear that ?Medicare carve-out' plans that simply deduct from the benefits provided to Medicare eligible retirees those benefits that Medicare provides do not violate the ADEA, additional review is needed to assess other types of retiree health plan practices," Dominguez writes.

The American Association of Health Plans, Washington, and the American Benefits Council, Washington, issued statements praising the EEOC move and saying it would help give employers the flexibility they need to continue offering retiree benefits.

But "the Erie County decision still remains troubling for all employers" who provide retiree health benefits," the benefits council warns.