This is an update to my prior post on January 2, 2008 regarding retiree healthcare benefits.

A legal battle dating back to 2000 regarding retiree benefits came to a close recently.  In 2000, the Third Circuit ruled that treating Medicare-eligible retirees differently than younger retirees violated the Age Discrimination in Employment Act (ADEA).  This prompted the EEOC to issue an exemption to the ADEA allowing employers to reduce or eliminate retiree healthcare benefits for Medicare-eligible retirees, while providing higher levels of benefits for those retirees who are not Medicare-eligible.  The American Association of Retired Persons (AARP) challenged the EEOC’s authority to issue this rule.  The district court and Third Circuit rejected AARP’s challenge. 

Recently, the U.S. Supreme Court, as anticipated, declined to hear AARP’s appeal on this issue.  This means that, absent Congressional action amending the ADEA, employers can now provide retiree healthcare benefits and coordinate those benefits with Medicare without fear of violating the ADEA.