<nobr>Sep 12, 2003</nobr>

ERIC Supports EEOC Rule to Exempt Retiree Health Benefits from ADEA

Washington, DC – The ERISA Industry Committee (ERIC) today issued comments strongly supporting an EEOC proposal to exempt retiree medical benefits from the Age Discrimination in Employment Act (the “ADEA”) if an employer decides to change, alter or eliminate its employer-sponsored health benefits when pre-Medicare retirees become eligible for Medicare benefits.

The EEOC rule is in response to a controversial court ruling issued by the Third Circuit Court of Appeals. In Erie County Retirees Assn. v. Erie County the court ruled that benefit reductions keyed to Medicare eligibility is barred by the ADEA. ERIC has long maintained that the court’s decision would result in a substantial decrease and even eliminate many employer-provided retiree health benefits – precisely what happened to employees of Erie County, Pa.

“The EEOC exemption places the interests of older workers and their families first, by assuring that the ADEA does not discourage employers from providing health benefits to retirees,” said Mark Ugoretz, president of the ERISA Industry Committee. “In a climate of double-digit health care costs, it is highly unlikely that any employer would be able to maintain increased benefits to Medicare eligible retirees as by the Erie County decision, without severely reducing benefits to pre-Medicare eligibles retirees and active employees.”

Although fully supporting the proposed amendment, ERIC in its comments recommended that the EEOC make clear that the exemption be applied retroactively to changes made by existing plans before the final rule is published in the Federal Register. The proposed amendment does not clearly state whether, once the exemption becomes effective, the exemption will apply to plan changes relating to an existing plan that occurred before the effective date as well as to plan changes that occur thereafter.

ERIC urged that if the exemption does not apply retroactively, the final rule should state that the exemption does not imply that the practices covered by the exemption would be unlawful in the absence of the exemption.
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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.or

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