Age Discrimination
AARP Action Blocks EEOC Rule that Discriminates Against Older Retirees
News Release
February 4, 2005
A federal judge, responding to a lawsuit by AARP, today temporarily blocked the federal Equal Employment Opportunity Commission (EEOC) from issuing an age discriminatory rule that opens the door to elimination of employer-sponsored health benefits for Medicare recipients. The judge's ruling delays final implementation for at least sixty days.
"We took this action to protect our members and all retirees from losing their rights under the age discrimination laws" explained David Certner, AARP's Director of Federal Affairs. This would have put millions of retirees at greater risk for losing their retiree health coverage.
The lawsuit is designed to clear the way for additional discussions among policymakers and other interested parties that will lead to proposals that protect retirees while addressing employers' concerns about rising health care costs.
AARP pursued this legal course after long and repeated attempts to find a better solution to the retiree health question proved unsuccessful. This action prevented the imminent implementation of the final rule. Failing to do this would have allowed employers to eliminate retiree health benefits without regard to age discrimination laws.
On April 22, 2004, the EEOC approved a final rule that exempts employers from the federal age discrimination law if they decide to abandon retirees' health coverage when the retirees become eligible for Medicare at age 65. This means that retirees can lose their retiree health benefits and will be barred from challenging their former employer's actions.
In anticipation of the EEOC rule taking effect, AARP and six of its members who are affected by the exemption earlier today filed the suit in District Court. AARP and the retirees asked for a preliminary injunction to block implementation of the EEOC rule, arguing that the agency acted illegally in limiting the provisions of the Age Discrimination in Employment Act (ADEA) by allowing companies to discriminate against those over 65.
"AARP is pleased that no rule will be issued until the District Court has the opportunity to decide the merits of the case," said Certner.
This is one battle in AARP's larger fight to bring affordable and accessible health care to everyone. The organization successfully prevented inclusion of a provision in the Medicare prescription drug legislation in 2003 that would have allowed employers to eliminate health coverage for retirees over age 65 while maintaining more generous benefits to retirees under 65.
AARP recognizes that rising health care costs pose challenges to all, including employers. In fact, over the past decade, employers have been reducing or dropping retiree health benefits because of rising health care costs.
That is why AARP supported the inclusion of $71 billion in direct federal subsidies in the 2003 prescription drug bill to help defray employers' prescription drug costs for retirees.
In its suit, AARP contends that the EEOC is charged with preventing age discrimination, not with making health care policy choices that could result in employers eliminating benefits for those who become eligible for Medicare.
"The law is clear that if they choose to provide retiree health benefits, they cannot deny them to some of their retirees based on age." Said Laurie McCann, an AARP attorney.
Employer-provided retiree health benefits are critical for millions of older Americans because they usually are more extensive than the benefits provided by Medicare. About 12 million of the nation's 40 million Medicare beneficiaries are currently covered by employer-sponsored benefits that pay at least some of their health care costs not covered by Medicare. Age discrimination protection for these benefits would be lost under the EEOC rule.
The six retiree plaintiffs in the suit range in age from 76 to 81. Five are from Pennsylvania and one from New Jersey. They all already have faced some downsizing of their health care benefits and, therefore, fear that their benefits could be eliminated under the new rule.
The Pennsylvania plaintiffs are Jack W. MacMillan of State College; Frank A. Wheeler of Philadelphia; Fred Dochat of Lancaster; Gerald Fowler of Mill Hall; and M. Elaine Clay of Blue Bell. The New Jersey plaintiff is Frank H. Smith of Columbus.
Smith, 81, and his wife have received health care benefits during retirement after his 23 years with his employer. The benefits generally cover costs not covered by Medicare, including prescription drugs. Between Smith and his spouse, annual prescription drug costs total nearly $10,000. Elimination of the benefits by his former employer would leave the Smiths without coverage for many of their health care expenses.
The EEOC rule seeks to reverse a 2000 decision by the U.S. Court of Appeals for the Third Circuit in Philadelphia - Erie County Retirees Association v. Erie County (PA) - that found that the county violated the ADEA by offering better benefits for younger retirees than to Medicare eligible retirees.
The EEOC had asserted at the time of the Erie case that the proposed reduction was illegal, but has now reversed its position.
AARP members, many of them on fixed incomes and concerned about the potential loss of prescription drug and other health benefits, have shown strong opposition to the EEOC rule. More than 60,000 have contacted the EEOC in protest, and more than 100,000 calls and letters have gone to Congress.
AARP is a nonprofit, nonpartisan membership organization that helps people 50 + have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. We produce AARP The Magazine, published bimonthly; AARP Bulletin, our monthly newspaper; AARP Segunda Juventud, our bimonthly magazine in Spanish and English; NRTA Live & Learn, our quarterly newsletter for 50+ educators, and our website, www.aarp.org. AARP Foundation is our affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands.