Cutting off benefits to retirees gets OK

EEOC approves employers reducing, ending health insurance when they turn 65

December 27, 2007|By New York Times News Service.

WASHINGTON -- The Equal Employment Opportunity Commission said yesterday that employers may reduce or eliminate health benefits for retirees when they turn 65 and become eligible for Medicare.

The policy, set forth in a new regulation, allows employers to establish two classes of retirees, with more comprehensive benefits for those under 65 and more limited benefits - or none at all - for those older.

More than 10 million retirees rely on employer-sponsored health plans as a primary source of coverage or as a supplement to Medicare. Naomi C. Earp, the commission's chairwoman, said, "This rule will help employers continue to voluntarily provide and maintain these critically important health benefits."

Premiums for employer-sponsored health insurance rose an average of 6.1 percent this year and have increased 78 percent since 2001, according to surveys by the Kaiser Family Foundation. Because of the rising cost of health care and the increased life expectancy of workers, the EEOC said, many employers refuse to provide retiree health benefits or even to negotiate on the issue.

In general, employers are not required by federal law to provide health benefits to either active or retired workers.

Dianna B. Johnston, a lawyer for the commission, said many employers and labor unions had told it that "if they had to provide identical benefits for retirees under 65 and over 65, they would just drop retiree health benefits altogether for both groups."

In a preamble to the new regulation, published yesterday in the Federal Register, the commission said, "The final rule is not intended to encourage employers to eliminate any retiree health benefits they may currently provide."

But the AARP and other advocates for older Americans attacked the rule. "This rule gives employers free rein to use age as a basis for reducing or eliminating health care benefits for retirees 65 and older," said Christopher G. Mackaronis, a lawyer for the AARP, which represents millions of people age 50 or above.

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