Supporters accuse AARP and other opponents of the rule with “fear-mongering,” and say the EEOC decision simply allows employers to continue to offer health benefits to retirees who are not yet eligible for Medicare. They claim the EEOC decision does not cut the benefits of Medicare-eligible retirees, and does not alter contracts currently in force between employers and labor unions.
According to supporters of the proposed rule, if AARP waged a successful lawsuit and the EEOC decision were overturned, employers would be forced to choose among:
- increasing the benefits of Medicare-eligible retirees to match those of pre- Medicare retirees;
- reducing pre-Medicare retiree benefits to match those of Medicare-eligible retirees; or
- eliminating medical benefits for all retirees.
Given the rapid increase in medical costs and health insurance, supporters argue that most employers would not be able to afford to increase benefits for pre-Medicare retirees and bring them level with those of older retirees who are eligible for Medicare.
Essentially, supporters say, if opponents succeed in reversing the EEOC decision, they will create the very problem they say they’re trying to prevent—widespread elimination of all retiree medical benefits—because many employers may opt for that as the simplest way to avoid the cost and complexity of redesigning their plans to meet the higher standard.
AARP and other opponents say nearly 12 million Medicare-eligible retirees currently have employer-sponsored policies, which typically cover prescription drugs and other benefits not covered by the federal program. Under the new rule, according to the opponents, many retirees could lose those supplemental benefits at a time of life when they may need them most.
"This rule sends a clear message to employers," said Michael W. Naylor, AARP's director of advocacy. "It says they can be as generous as they want when offering benefits as an incentive for early retirement—and can forget about health benefits when their retirees reach age 65."
AARP is joined in its opposition to the proposed rule by other prominent organizations, such as the American Association of People with Disabilities and the National Association of Retired Federal Employees.
Even among the EEOC commissioners, support for the decision wasn’t unanimous. The EEOC voted 3 to 1 to adopt the rule, with the three Republican commissioners voting in favor and the single Democrat voting against adoption. In his dissenting opinion, EEOC Commissioner Stuart J. Ishimaru said, “I oppose the [proposed rule] because it will allow employers to discriminate against older retirees in the type of health care benefits it provides.”
Despite the controversy, it seems clear that the EEOC had good intentions. In summarizing its action, the EEOC said, “To address concerns that the ADEA may be construed to create an incentive for employers to eliminate or reduce retiree health benefits, EEOC is creating a narrow exemption from the prohibitions of the ADEA for the practice of coordinating employer-sponsored retiree health benefits with eligibility for Medicare or a comparable State health benefits program. The rule does not otherwise affect an employer's ability to offer health or other employment benefits to retirees, consistent with the law.”
Nevertheless, AARP and other opponents are adamant in their opposition. According to Naylor, if negotiations fail to produce protections for older retirees, AARP will take the issue to court.
"The EEOC exceeded its authority," he says. "Its job is to prevent discrimination. Making health policy is a job for Congress."
