The Supreme Court recently rejected a legal challenge from AARP, which contended that employers that reduce health benefits for former employees who become eligible for Medicare violate age discrimination laws.
The case began approximately eight years ago in 2000 when retired county workers in Erie, Pennsylvania who had their health benefits reduced when they turned 65 claimed that such a policy violated the Age Discrimination in Employment Act (ADEA). The U.S. Court of Appeals in Philadelphia held that this policy amounted to age discrimination.
Initially, the Equal Employment Opportunity Commission (EEOC) agreed with the Appeals Court decision. In 2003, however, the EEOC determined that the ruling would incentivize employers to not offer benefits to retirees for fear of running afoul of age discrimination laws. With this concern in mind, the EEOC proposed an exception to the ADEA, allowing employers to reduce health benefits when former employees became eligible for Medicare.
In June 2008, the Appeals Court essentially reversed itself and upheld the EEOC’s new policy. For more information, please visit the Los Angeles Times article entitled, Supreme Court allows retiree benefit cuts