EEOC Approves 'Erie County' Exemption

A news release from the ERISA Industry Committee (ERIC) said the move by the Equal Employment Opportunity Commission (EEOC) provides relief from the Erie County court ruling by the US 3rd Circuit Court of Appeals, which ruled that the ADEA applies to retirees, not just active workers, in Erie County Retirees Association v.of (See Erie Go Again ). The EEOC’s proposed rule is at http://edocket.access.gpo.gov/2003/03-17738.htm .

“Today’s action is an important victory for retirees – especially pre-Medicare eligible retirees ages 50 to 64 – and the employers who wish to continue to provide them with post-employment health care coverage,” ERIC President Mark Ugoretz said in the announcement. “We have cleared a major hurdle on the way to securing much needed relief, and urge the interagency review process to proceed quickly.”

In the Erie case, the court found that Erie County, Pennsylvania had discriminated against older retirees by offering them coverage that was alleged to be less valuable than that offered to retirees who were not yet eligible for Medicare. Concerns about the reach of that case multiplied when the EEOC incorporated the court’s position into its compliance manual, which meant employers could face enforcement actions from the commission as well.

According to ERIC, the Erie County ruling gave employers two choices:

• provide equal benefits to pre- and post-Medicare eligible retirees, which ERIC said results in a windfall to post-Medicare eligible retirees because their employer coverage in addition to Medicare gives them greater total coverage than the employer-only coverage pre-Medicare retirees would get.
• to significantly reduce or eliminate retiree health coverage altogether.

“Employers simply can not afford to comply with Erie County by topping up coverage for post-Medicare eligible; the only economically feasible option is to reduce coverage for pre-Medicare eligible retirees or drop retiree health coverage entirely,” Ugoretz asserted. “The exemption solves that dilemma.”

The EEOC had signalled that it might provide the requested Erie County ruling relief. (See  Encouraging Words? ).

Another industry group, the American Benefits Council, also released a  letter to the EEOC urging the agency to finalize the ADEA exemption proposal. 

Finally, one prominent lawmaker weighed in late Thursday after the EEOC decision.   “The EEOC should be commended for moving forward with a common sense regulation to help preserve important retiree health benefits for millions of American seniors,” said U.S. House Education & the Workforce Committee Chairman John Boehner (R-Ohio) .  “We should be encouraging employers to continue providing generous health benefits to retirees, and this regulation will help ensure they are able to do so without subjecting themselves to groundless charges of age discrimination.”