Client Alert

Employers May Coordinate Retiree Health Care Benefits With Medicare

June 21, 2007

Neal Mollen and Frank Kinson

The Third Circuit has just resolved a significant retiree issue regarding application of federal age discrimination law to retiree health coverage by holding that employers may reduce or eliminate that coverage when a covered person becomes eligible for Medicare. According to the Third Circuit, doing so does not violate the Age Discrimination In Employment Act because the Equal Employment Opportunity Commissions exemption permitting that practice is a valid exercise of its statutory exemption authority. AARP v. EEOC, No. 05-4595, ___ F.3d ___, 2007 WL 1584385, 40 Employee Benefits. Cas. (BNA) 2287 (3d Cir. June 4, 2007). This decision should come as welcome news for both employers and retirees alike.

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