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 July 14, 2003 EEOC
PROPOSES TO EXEMPT RETIREE HEALTH COVERAGE FROM THE AGE DISCRIMINATION
IN EMPLOYMENT ACT
On July 11, 2003, the Equal Employment Opportunity Commission (EEOC)
released a proposed regulation that would allow sponsors of group health
plans to provide different or less health coverage to Medicare-eligible
retirees than the coverage provided to younger retirees, without violating
the Age Discrimination in Employment Act (ADEA). When the proposed rule
is adopted in final form (following the receipt and consideration of
public comments), it will have the effect of reversing the Third Circuit
U.S. Court of Appeals' controversial 2000 decision in Erie Country
Retirees Ass'n. v. County of Erie, Pa. case (220 F. 3d 193 (3d Cir.
2000)).* The EEOC based its proposed rule on an extensive analysis of the economic
environment surrounding retiree health care, and a pragmatic concern
for real-life consequences. It would apply to retiree health plans funded
by both private and public sector employers. (The preamble to the proposed
rule takes care to stress that the proposal would not exempt any other
retiree benefit programs from the ADEA's general ban on age-based discrimination.)
When effective, the EEOC rule will apply to existing as well as future
plans and practices. In the meantime, sponsors of health plans that
cover retirees will need to rely on their attorneys' advice in deciding
how to interpret and react to the EEOC's proposed regulation.
Text of the EEOC's
proposed regulation available in the July
14 issue of the Federal Register.
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