If your organization offers health insurance to retired employees, an important new Equal Employment Opportunity Commission (EEOC) ruling says you can reduce or eliminate those benefits after the ex-employee becomes eligible for Medicare at age 65.
Many organizations have made this move in recent years. Fact: A recent survey of employers who offer health benefits for retirees found that 57 percent extend the benefit to Medicare-eligible retirees now, down from 80 percent in 1991, according to HR consulting firm Hewitt Associates.
But this cost-cutting action was called into doubt by a federal appeals court ruling in 2000 that said such cuts violated federal age discrimination laws.
The new EEOC ruling allows employers to breathe easier again. It says employers won't violate age-bias laws if they cut retiree benefits for Medicare-eligible workers. The rule also would apply to those eligible for state-sponsored health benefits.
Outlook: It's likely the courts will challenge the EEOC's rule. Read the rules at www.eeoc.gov/policy/regs/ retiree_benefits.html.
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