<nobr>Sep 25, 2002</nobr>

ERIC Aligns with Labor, Retiree and Business Groups to Preserve Employer-Sponsored Health Benefits for American Retirees

WASHINGTON, DC - The ERISA Industry Committee (ERIC) today joined forces with organized labor, older American and other business organizations urging Congress to preserve retiree health benefits for Americans across the country. In a letter sent to key members of Congress, the groups asked members to clarify present law on employer sponsored retiree health benefits, especially in light of a recent circuit court decision that clouds the intended laws.

The letter contends that in 2000, the Third Circuit decided, in Erie County Retirees Association v. Erie County, that the practice of providing a higher level of health care benefits to pre-65 retirees than to Medicare eligible retirees may violate the Age Discrimination in Employment Act ("ADEA"). "We strongly believe that this case was wrongly decided, and misinterpreted Congressional intent in regard to employer-sponsored retiree health benefits," the letter states.

The groups agreed on and submitted proposed legislative language that would clarify present law and Congressional intent. The draft language clearly reaffirms that it is permissible for an employer to provide retiree health benefits during the gap period between retirement and Medicare eligibility, without incurring liabilities to retirees who are eligible for Medicare.

ERIC has long maintained that the Erie County decision is being felt not only by employers within the Third Circuit, but is having an impact on employers with a national workforce. ERIC believes that the court decision will result in a substantial decrease or even elimination of many employer-provided retiree health benefits if not clarified immediately.

"Erie County provides a strong incentive for employers who provide retiree health benefits to reduce or even eliminate those benefits completely," said Mark Ugoretz, president of ERIC. "In the present climate of escalating health care costs, it is more likely that employers will reduce benefits to pre-Medicare eligibles in order to equalize the cost of having to fund Medicare eligible retirees."

Organizations signing the letter include: Alliance for Retired Americans; American Association of Health Plans; American Benefits Council; American Federation of Teachers, AFL-CIO; The ERISA Industry Committee; Financial Executives International; Committee on Benefits Finance; National Education Association; National Rural Electric Cooperative Association; 60 PLUS Association; The Seniors Coalition; United Seniors Association

The letter was sent to the following members of Congress: Sens. Max Baucus, Chuck Grassley, Edward Kennedy, and Judd Gregg; and Reps. Bill Thomas, Charlie Rangel, John Boehner, and George Miller.

The ERISA Industry Committee (ERIC) is a non-profit association committed to the advancement of employee retirement, health, and welfare benefit plans of America's largest employers and represents exclusively the employee benefits interests of major employers. ERIC's members provide comprehensive retirement, health care coverage and other economic security benefits directly to some 25 million active and retired workers and their families. ERIC has a strong interest in proposals affecting its members' ability to deliver those benefits, their cost and their effectiveness, as well as the role of those benefits in the American economy.

Media Contact: Doug Baj, Director, Communications, ERISA Industry Committee, (202) 789-1400,dbaj@eric.org.


Text Files:

A copy of the letter and testimony.

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