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March 31, 2005
Judge Rejects EEOC's Retiree-Benefit Rule

A federal judge has ruled that the U.S. Equal Employment Opportunity Commission lacks the authority to issue a rule that would allow employers to reduce or eliminate retiree health benefits once retirees become eligible for Medicare without violating the Age Discrimination in Employment Act, the Associated Press reports.

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U.S. District Judge Anita Brody said the proposed rule would have violated a legal precedent that employers must offer health plans of equal value or provide equal benefits to retirees of different ages, according to the news service.

The agency says it will ask the Justice Department to appeal the decision, arguing that it has the power to issue the rule and that the proposed regulation to allow employers to coordinate retiree health benefits with Medicare eligibility is necessary.

"Specifically, the rule will clarify that employers may continue to coordinate retiree health benefit plans with eligibility for Medicare or a comparable state health benefit without violating the ADEA," says Cari M. Dominguez, chair of the EEOC. "It does not change current employer practices or plans, nor does it affect any other legal obligations an employer may have. On the contrary, the rule removes an impediment to employers so that they may continue providing retirees with critical health care coverage."

Oppoents of the rule disagree. The AARP filed the lawsuit to block the rule.

"You can't just arbitrarily decide that the oldest, frailest people will have their benefits reduced so that the less old can get a better package," AARP lawyer Michele Pollak tells the news service.


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