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August 27, 2001 EEOC
PULLS BACK ON SUPPORT FOR On August 20, 2001, the U.S. Equal Employment Opportunity Commission (EEOC) announced that it is re-examining the issues addressed in the Erie County retiree health court decisions. Accordingly, the EEOC has withdrawn the position taken in its enforcement manual, inserted after the Third Circuit Court of Appeals' Erie County decision, which had stated that it could be a violation of the Age Discrimination in Employment Act (ADEA) to reduce or eliminate health coverage for retirees over 65. The EEOC has also dropped the enforcement actions launched against a number of Midwest school districts and teachers' unions, challenging their retiree health plans for ceasing coverage when the retiree reaches age 65. To see the EEOC's press release announcing the modification of the enforcement manual, click here. Implications The EEOC's recent action means that, at least for the time being, the agency will not be challenging employers and employee plans that provide health coverage for early retirees that is or appears to be richer than what they provide for Medicare-eligible retirees. However, the EEOC has not said that those kinds of plans are legal under the ADEA, and one US Court of Appeals has said that they are not. Accordingly, while the news about the EEOC's possible change of heart is encouraging, plan sponsors should consult with and rely on their attorneys for advice about the compliance implications of the design of their health and welfare funds' coverage for early retirees and Medicare-eligible retirees, in light of the Erie County case. For more information about the Erie County case, see the May 23, 2001 issue of The Segal Company's Capital Checkup.
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