The U.S. Supreme Court has declined to review a decision made by the U.S. Court of Appeals in Philadelphia in AARP vs. EEOC that the Equal Employment Opportunity Commission's (EEOC) rule permitting employers to coordinate their health benefits for retirees with Medicare was "legal and reasonable." The Appeals Court said that "over time, it will likely benefit all retirees," the LA Times reports.
The American Association of Retired Persons (AARP), which had challenged the ruling and appealed to the Supreme Court, said in a statement, that the Court's refusal to hear their appeal "clears the way for employers to discriminate by reducing or terminating benefits for older retirees simply because they've turned 65 years old."
The new ruling clarifies what had long been an accepted assumption, the EEOC said in a press release accompanying the publication of their final ruling, by providing an "exemption for ADEA coverage for this common and longstanding employer practice."
The EEOC had proposed the ruling in 2004 in response to a court decision in 2000 in Erie, PA that required employers to pay the same amount for benefits for Medicare-eligible retirees as for younger retirees. After the Erie decision, labor unions and employers alike "informed the EEOC that complying with the decision would force companies to reduce or eliminate the retiree health benefits they currently provide," the Commission said in the press release. AARP challenged the ruling in 2005. The EEOC published their final ruling in December 2007.
Companies and labor unions that had disagreed with AARP welcomed the Supreme Court's decision. They said that it would be particularly helpful to younger retirees, the LA Times reports.
Bill Raabe, director of collective bargaining for the National Education Association, a supporter of the ruling, said, according to the LA Times, that "the practical effect of any law that requires employers to provide identical benefits for pre- and post-Medicare-eligible retirees would be the erosion of post-retirement healthcare benefits for all."
In his statement on the Commission's new ruling, EEOC Vice-Chair Leslie E. Silverman wrote, "The Erie County decision would have made most existing retiree health plans unlawful. EEOC's new rule will ensure that employers can continue to offer their retirees much needed health benefits."
In their reaction to the Supreme Court decision not to hear their appeal, AARP said that the ruling creates a double standard for health benefits and "is especially troubling because it comes from the EEOC, the federal government agency created to enforce anti-discrimination policies."
The AARP statement goes on to say that, "The new policy is an ineffective Band-aid for the bigger issue facing American employers and workers: the skyrocketing cost of health care. . . . Instead of discriminatory rules that simply shift health care costs to older retirees, we need real solutions that control ongoing and dramatic increases in health care costs. Political, business, union and non-profit leaders, as well as individual citizens, all have roles to play in devising effective policies that will ensure that every American has access to affordable health care."