The U.S. Equal Employment Opportunity Commission (EEOC) issued a final rule on December 26, 2007, that permits employers and labor organizations to offer retirees a wide range of health plans that incorporate Medicare or comparable State health benefit programs without violating the Age Discrimination in Employment Act of 1967 (ADEA).

This new ruling corrects a conflict based on a prior court ruling and the resulting ADEA implications. The prior interpretation was perceived to be an incentive to employers to reduce or eliminate retiree health benefits. As such, the EEOC is effectively creating an exemption from the prohibitions of the ADEA, by permitting the practice of coordinating employer-sponsored retiree health benefits with eligibility for Medicare or a comparable State health benefits program. It should be noted that the final rule only deals with the ADEA and as such does not affect any non-ADEA obligations that employers may have to provide health benefits under Medicare or any other law.

For any entity that sponsors retiree health plans, this would be an ideal opportunity to review retiree plans in order to determine if there is a more effective and efficient manner to provide these benefits while complying with the new regulations.

If you have any questions or comments, please contact Elliot Dinkin, 412-394-9330.