Some employers provide a broader health care benefit package to early retirees than they do to retirees who have turned 65, because the latter group has an alternate source of coverage for many services through Medicare.  After the EEOC issued a 2004 rule legitimizing this longstanding practice, the American Association of Retired Persons (AARP) sued to block its implementation.  The trial court initially ruled for the AARP on an interim basis, but ultimately granted summary judgment to the EEOC, approving the rule.

The U.S. Court of Appeals for the Third Circuit recently affirmed that decision, holding that the EEOC had properly exercised authority given it by Congress in the Age Discrimination in Employment Act to grant exemptions that are “reasonable” and “necessary and proper in the public interest.”  Employer representatives applauded the Third Circuit’s decision, noting that, if employers were required to spend as much on health care for retirees who have Medicare coverage as they spend on early retirees who have no such coverage, many employers would choose to reduce or even eliminate retiree health care benefits.

Noel D. Massie