Thursday, December 27, 2007

EEOC allows employers to reduce retiree health benefits at age 65

Pursuant to a new Rule published yesterday by the EEOC, employers can take Medicare into account when structuring retiree health benefit packages without violating the age discrimination laws. The rule clarifies the long standing practice of most companies that provide retiree health benefits, by which they reduce their health insurance expenses for retired workers once they turn 65 and qualify for Medicare. In other words, employers can lawfully spend more on retirees under the age of 65 years than those over 65 without running afoul of age discrimination laws. Practically, though, retirees in both age groups will most likely receive essentially the same benefits, just at a lower costs to employers.

A copy of the EEOC's new Rule on Retiree Health Benefits is available here, along with a Q&A explaining the Rule here.