<nobr>Jun 5, 2007</nobr>

ERIC Applauds Ruling Upholding EEOC Exemption Permitting Coordination of Employer Plan with Medicare

Washington, D.C. -- In a major, long sought victory for employers, the Third Circuit Court of Appeals yesterday upheld the authority of the Equal Employment Opportunity Commission (EEOC) to grant an exemption to the Age Discrimination in Employment Act (ADEA) that permits employers to coordinate coverage of their retiree health plans with Medicare (AARP v. EEOC, 3rd Cir., No. 05-4594, June 4, 2007).

ERIC, together with other employer groups, filed amicus briefs at several stages during the extensive litigation. In addition, ERIC met extensively with EEOC urging that they issue the exemption. The matter has been in flux for several years and employers have anxiously awaited a decision by the court.

ERIC President Mark Ugoretz applauded the ruling: "It will ensure that the application of the ADEA does not discourage employers from providing health benefits to their retirees. This practice is reasonable, fair, sensible and a cost-effective means of meeting retiree health care needs by providing a "bridge" that carries the retiree from the start of retirement until eligibility for Medicare."

The appellate court held that the EEOC's action was both reasonable and proper, and in the public interest. The opinion recognized that employer plans were voluntary and that, in the absence of the exemption, it was likely that employers would accelerate their retreat from offering retiree health plans.

The case holds enormous importance to companies who are committed to providing retiree health benefits in a climate of increasing costs. By coordinating their health care benefits to retirees with Medicare, employers are able to provide both active and retired employees with sound health care plans. The Third Circuit's ruling provides some measure of confidence that employers will continue to provide retiree health benefits in an increasingly costly environment.

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For more information:
Ted Godbout
Manager, Communications
The ERISA Industry Committee
1400 L Street, N.W., Suite 350
Washington, DC 20005
Phone: (202) 789-1400
Fax: (202) 789-1120
E-mail: tgodbout@eric.org
www.eric.org
Text Files:

AARP v. EEOC

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