12 Million Retirees on Medicare May Lose
Benefits under Employer's Health Plan

In a new ruling, the Equal Employment Opportunity Commission has given a green light to the nation's employers that they may cut or eliminate the benefits of retired employees who are also receiving Medicare health insurance.

The agency approved a final rule on April 22 that such cuts in health benefits of retirees do not violate the civil rights law that bans age discrimination. The vote was 3 to 1, with Republicans in favor and one Democrat opposed.

About 12 million Medicare beneficiaries also receive benefits from their former employer's health plan. Those benefits help retirees pay medical expenses not covered by Medicare. They could include co-payments and deductibles, the cost of preventive care, serious illness and prescription drugs beyond what Medicare pays.

The ruling has been vigorously opposed by the AARP, which says it would "explore a range of different steps, including litigation," to block the rule unless it is changed. The EEOC has been deluged with letters and e-mails from more than 50,000 AARP members.

Strictly speaking, the benefits that retirees receive are the subject of contract negotiations between the employer and the union. It is usually included as part of the wage package in the final settlement.

Faced with skyrocketing health-care costs, employers say that if they can cut out payments to their retirees who are on Medicare, they can continue to provide coverage to retirees under age 65.

The two teachers unions, the AFL-CIO's American Federation of Teachers and the independent National Education Association, have endorsed the ruling. They say it helps teachers who often retire early and rely on employer-provided health benefits until they become eligible for Medicare. There has been no support for the ruling by any other of the 64 AFL-CIO internationals.

Actually, there is no law that requires employers to provide a health plan for their workers. If premiums continue to escalate as they have in recent years, employers may say that the only way they can provide health insurance to their employees is if they sharply reduce or eliminate benefits to retirees. Unions may eventually have to deal with that problem.

Health care costs have become a dominant issue in every contract negotiation, with employers trying to shift the burden of higher premiums to their employees. Health insurance is no longer affordable for millions of middle-class families.

An AARP lawyer, Michele Pollak, said: "This rule will allow employers to reduce or eliminate retiree health benefits for anyone over the age of 65. More than 12 million Medicare beneficiaries currently receive retiree health benefits from employers and could potentially be affected." She said that the commission did not have authority to create such exemptions.

Cari M. Dominguez, EEOC chairwoman, insists that her commission does have the authority to make the exemptions, although the power has been rarely used.

Stuart J. Ishimaru, the Democrat who cast the only "no" vote, said that "the proper role of the commission is not to make health policy, but to protect people from discrimination.²

The rule is subject to comment by other agencies, and it will be reviewed by the Office of Management and Budget.

Our weekly columns, "LaborTalk" and "Labor and the War" can be viewed at our Web site www.laboreducator.org. Union members who want information about the AFL-CIO rank-and-file reform movement should visit www.rankandfileaflcio.org.