In a ruling that favors employers, the Equal Employment Opportunity Commission ruled
on Wednesday that employers can reduce or eliminate health benefits for workers over the age of 65 or when they become eligible for Medicare.
This means that workers over the age of 65 can be employed and their boss does not have to offer any benefits. Employees under the age of 65 would still have to be offered benefits.
The new regulation could affect more than ten million retirees who rely on health plans offered by an employer to supplement Medicare. The change comes at a time when more older workers are expected to fill jobs in an increasing labor shortage predicted over the next two decades.
The fear has been that employers would eliminate or cut health benefits across the board if they have to provide identical benefits to workers over the age of 65.
The problem is the cost of health care. The price of health insurance is rising for employers, an average of 6.1 percent in 2007, according to a survey by the Kaiser Family Foundation.
Premiums have risen 78 percent since 2001 according to the survey and employers are increasingly looking for ways to trim the worker compensation plans, including having workers contribute more themselves.
The new regulation was published Wednesday in the Federal Register and the EEOC says, “The final rule is not intended to encourage employers to eliminate any retiree health benefits they may currently provide.”
The American Association for Retired Persons (AARP) says this is a way to discriminate against older Americans. The Age Discrimination Employment Act (ADEA) of 1967 does not allow age discrimination in the workplace.
In 2000, an appeals court ruled that there can be exemptions to the ADEA.
Last June, the U.S. Court of Appeals upheld the EEOC’s right to exemptions under the Act. The AARP received a temporary ruling in 2005 that stopped the EEOC from writing a new rule.
The AARP has asked the U.S. Supreme Court to intervene in the decision that allows the EEOC “reasonable exemptions” in the public interest.
The rules do not affect benefits that employers offer their current employees. #