New EEOC rule might cost many retirees their health benefits

I predict that we are going to hear a lot of howling from retiree quarters when the inevitable letters start landing in mailboxes that inform retirees that their health bennies are being cut.

The Equal Employment Opportunity Commission said Wednesday that employers could reduce or eliminate health benefits for retirees when they turn 65 and become eligible for Medicare.

The policy, set forth in a new regulation, allows employers to establish two classes of retirees, with more comprehensive benefits for those under 65 and more limited benefits — or none at all — for those older.

More than 10 million retirees rely on employer-sponsored health plans as a primary source of coverage or as a supplement to Medicare, and Naomi C. Earp, the commission’s chairwoman, said, “This rule will help employers continue to voluntarily provide and maintain these critically important health benefits.”

Premiums for employer-sponsored health insurance rose an average of 6.1 percent this year and have increased 78 percent since 2001, according to surveys by the Kaiser Family Foundation. Because of the rising cost of health care and the increased life expectancy of workers, the commission said, many employers refuse to provide retiree health benefits or even to negotiate on the issue.

In general, the commission observed, employers are not required by federal law to provide health benefits to either active or retired workers.

The new regulation was published Wednesday in the Federal Register. The EEOC was quick to get it on the record that the new regulation is not intended to “encourage employers to eliminate any retiree health benefits they may currently provide.” (Even though everyone with more than three functioning neural synapses knows that will be the net effect, and it will occur in short order.)

An EEOC lawyer, Dianna B. Johnston, said that many employers and labor unions had reported to the commission that if they were required to provide identical health benefits for retirees over 65 (those eligible for Medicare) and those under, they would simply drop coverage for both groups, because the cost of health care is prohibitively expensive. The new rule will allow employers to, at their own discretion, provide retiree health benefits “only to those retirees who are not yet eligible for Medicare.” After age 65, retiree health benefits can be “altered, reduced or eliminated” when retirees become eligible for Medicare.

Employers will also be able to reduce or eliminate entirely health benefits for spouses or dependents of retirees over 65, regardless of whether the retiree benefits are changed. (Many of whom do not have their own coverage, especially housewives and part-time workers.)

The AARP attacked immediately. “This rule gives employers free rein to use age as a basis for reducing or eliminating health care benefits for retirees 65 and older,” said Christopher G. Mackaronis, a lawyer for the organization. “Ten million people could be affected — adversely affected — by the rule.” He also asserted that the new rule was a direct violation of the Age Discrimination in Employment Act of 1967.

It is a given that people over 65 consume more medical services than those under 65, and it is common knowledge that Medicare is available for all U.S. citizens 65 years of age and older. For several years employers have been trying to reduce benefits or shift some of the burden to the retirees themselves. The Medicare Part D drug benefit (donut hole and all) provides the cover necessary to make the change.

President of the American Benefits Council, James Klein, asserts that the new regulation is "a victory for common sense and for retirees. Retiree health coverage has been declining for many years. Without this rule, many more retirees, especially early retirees, could find themselves without employer-sponsored coverage.”

I appreciate the arguments being made - and I understand acutely the difficulties of the health care delivery system - I'm one of those youthful retirees, and I retired from a health care career - But I am not so sure that anyone affected is going to be convinced that it is a "victory for common sense and retirees. "

Come on! Seriously! If this wasn't a classic case of pissin' on my leg and tellin' me it was raining, do you really believe the announcement would be made the day after Christmas, in the midst of the slowest news week of the year? Because if you do, contact me immediately about this bridge I have for sale...